DraftKings revenue up 16% in 3Q26 as predictions spend widens losses
US sportsbook operator DraftKings saw third-quarter revenue rise by 16% on strong customer engagement and a higher sportsbook margin, though its net loss widened to nearly US$470 million as marketing spend surged.
According to its latest results released on Thursday, revenue rose to US$1.33 billion in 3Q26, up from US$1.14 billion a year earlier.
Sports revenue, which includes online and retail sportsbook as well as prediction markets, jumped 31.5% to US$783.6 million. Sports consumer volume climbed 21.9% to US$13.9 billion, while sports net revenue margin improved to 5.6% from 5.2%.
The group’s igaming revenue edged up 2.1% to US$460.9 million, while other revenue fell 12.5% to US$84.5 million.
Monthly unique payers increased 13% to 4.1 million, with average revenue per payer up 3% to US$109.
Sales and marketing spend rose 68% to US$605.7 million from US$360.4 million, and net loss widened to US$468.7 million from US$256.8 million. Adjusted EBITDA was a loss of US$316.9 million, compared to a loss of US$126.5 million.
Speaking of the results, CEO Jason Robins highlighted its venture into prediction markets, noting, “More than 1.6 million customers have engaged with Predictions year-to-date,” describing the quarter as “a pivotal moment for DraftKings.”
Amongst the results, the group has updated its 2026 guidance to revenue of between US$6.35 billion and US$6.55 billion and adjusted EBITDA of between US$175 million and US$275 million, mainly reflecting a higher adjusted EBITDA investment in Predictions of US$650 million to US$700 million.
Despite the confidence in the sector, the group highlighted that Predictions revenue will be immaterial this year as new customer promotions offset most gross revenue.
For 2027, the company expects revenue of between US$7.35 billion and US$7.75 billion, including US$650 million to US$750 million from Predictions, and adjusted EBITDA of between US$800 million and US$1 billion.
Dig Deeper
Related stories
2026/02/05: Genius Sports enters definitive agreement to acquire digital sports and gaming media network Legend
2026/02/12: DraftKings’ revenue increases by 43% to nearly $2 billion in fourth quarter
2026/05/08: DraftKings posts revenue of US$1.64 billion in first quarter, up 17%
2026/08/28: Allwyn’s 2Q26 revenue rises 27% to €1.25 billion, boosted by PrizePicks’ contribution
2026/02/05: Genius Sports enters definitive agreement to acquire digital sports and gaming media network Legend
2026/02/12: DraftKings’ revenue increases by 43% to nearly $2 billion in fourth quarter
2026/05/08: DraftKings posts revenue of US$1.64 billion in first quarter, up 17%
2026/08/28: Allwyn’s 2Q26 revenue rises 27% to €1.25 billion, boosted by PrizePicks’ contribution
The Backstory
Profitability gives way to a predictions land grab
DraftKings entered 2026 with a clear message to investors: Its core sportsbook and igaming businesses were large enough, and increasingly profitable enough, to fund a push into prediction markets. The third-quarter results show the cost of that decision. Revenue continued to climb, helped by customer engagement and stronger sportsbook margins, but the company’s loss widened sharply as marketing and product spending accelerated around Predictions.
The shift marks a notable change from the end of 2025, when DraftKings was emphasizing scale, margin improvement and its first full-year positive net income. In February, the company reported that fourth-quarter revenue rose 43% to nearly $2 billion, with management pointing to healthy customer engagement and higher sportsbook net revenue margin. At that point, Chief Executive Jason Robins framed Predictions as a “massive, incremental opportunity,” but the company still projected 2026 adjusted EBITDA of $700 million to $900 million.
That framework has now been recast. DraftKings’ latest guidance lowers 2026 adjusted EBITDA expectations to $175 million to $275 million, mainly because of $650 million to $700 million in expected investment in Predictions. The company is effectively using the cash-generating potential of its established business to buy early share in a market it believes could become a major adjacent category. The risk is that investors, after rewarding a path toward profitability, may have to underwrite another period of heavy customer acquisition spending.
A strong core business created room for risk
DraftKings’ ability to pursue that strategy rests on gains made across its sportsbook and igaming operations over the past several years. The company’s first-quarter update showed that its base business was still expanding, even as user metrics became more nuanced. DraftKings reported that first-quarter 2026 revenue increased 17% to US$1.64 billion, citing efficient customer acquisition, continued engagement and higher sportsbook net revenue margin.
Monthly unique payers fell 4% in that quarter, largely because of a lottery exit in Texas, but average revenue per monthly unique payer rose 21% to US$131. That mix was important. It suggested DraftKings was extracting more revenue from its user base, particularly through improved sportsbook margins, even as the company managed state-by-state complexity and product mix changes.
Management also telegraphed the strategic priority early. Robins said then that profitability was “inflecting,” giving DraftKings the “firepower” to press its advantage in predictions. The company highlighted market-making capabilities, a proprietary exchange and an in-house futures commission merchant as pieces of the infrastructure it expected to assemble during 2026. Analysts noted that Predictions had begun to overshadow an otherwise solid core quarter, a preview of the debate now surrounding the company.
The third-quarter numbers reinforce that tension. Sports revenue, including sportsbook and prediction markets, rose more than 31%, while igaming growth was modest. The business remains large and active, with 4.1 million monthly unique payers and sports consumer volume near US$14 billion. But the spending needed to build a new category has become the defining financial variable.
Prediction markets reshape competitive lines
DraftKings is not alone in trying to expand beyond traditional online sports betting. Across the sector, operators, suppliers and adjacent gaming groups are moving toward products that blend sports engagement, fantasy mechanics, betting-style interfaces and event-based trading. The appeal is clear: Prediction products can increase frequency, widen addressable audiences and potentially operate under different regulatory frameworks than conventional sports wagering.
Allwyn’s acquisition of PrizePicks shows how quickly the category has become strategically relevant. The global lottery and gaming group said second-quarter revenue rose 27% to €1.25 billion, helped by its majority stake in the U.S. daily fantasy sports operator. PrizePicks gave Allwyn a much larger North American digital footprint, with daily fantasy sports generating €231 million in net revenue during the quarter.
Allwyn also described product development that moves PrizePicks closer to the same engagement zone DraftKings is targeting, including features that let players combine player picks with team-based outcomes and integrate prediction markets alongside fantasy sports. That convergence matters. It suggests that the competitive set for DraftKings Predictions may extend beyond FanDuel and BetMGM to fantasy platforms, lottery-backed operators and eventually media and data companies with direct access to sports audiences.
For DraftKings, the opportunity is to use an existing customer base, sportsbook brand and trading infrastructure to move faster than newer entrants. The challenge is that rivals are not standing still, and some may be able to acquire or convert customers through fantasy-style products with different economics.
Rivals lean into discipline as DraftKings spends
The contrast with BetMGM is striking. While DraftKings is accepting a near-term earnings hit to accelerate Predictions, BetMGM is emphasizing disciplined growth and improved profitability. In its own third-quarter update, the MGM Resorts and Entain joint venture said adjusted EBITDA more than doubled to US$86 million, while net revenue increased 7% to US$710 million.
BetMGM’s average monthly actives fell 3%, which the company said reflected more selective player acquisition and management. Still, revenue per active rose in both online sports and igaming. That approach prioritizes higher-value users and margin expansion over broad-based volume growth. It also gives investors a cleaner profitability story at a time when online gambling companies are being judged less on state launches and more on sustainable cash flow.
DraftKings is making the opposite trade-off in the short term. Sales and marketing expense jumped 68% in the third quarter, driving a wider net loss despite higher revenue. The company has said Predictions revenue will be immaterial this year because promotions will offset most gross revenue, but it expects the product to contribute US$650 million to US$750 million in revenue in 2027.
That forecast is central to the investment case. If Predictions scales quickly, the 2026 spending could look like a rational land grab. If adoption slows, promotional intensity persists or regulators narrow the path for event-based contracts, DraftKings may face pressure to rein in spending and return to the profitability trajectory it promoted earlier in the year.
Media, data and customer acquisition costs converge
The push into Predictions also comes as the broader sports betting ecosystem looks for more efficient ways to monetize fans before they reach an operator’s app. Genius Sports’ planned purchase of Legend underscores that customer acquisition is becoming a media, data and technology contest as much as a sportsbook contest. The company said it agreed to acquire the digital sports and gaming media network Legend in a deal valued at up to $1.2 billion.
Legend’s network reaches users researching teams, players, odds and scores, then connects them with sportsbooks, gaming products and advertisers. For operators, that type of funnel is valuable because it reaches fans when intent is high. For data and media companies, it offers a way to capture more economics from betting-related engagement without necessarily operating a sportsbook.
This trend raises the stakes for DraftKings’ marketing surge. As more companies compete for sports audiences at the content, data and advertising layers, acquisition costs may stay elevated. DraftKings’ advantage is that it owns a large consumer platform and can cross-sell across sportsbook, igaming and prediction products. Its disadvantage is that defending that position requires continued spending, especially if emerging products depend on liquidity, promotions and habit formation.
The next test is conversion, not awareness
DraftKings said more than 1.6 million customers have engaged with Predictions year to date, an early sign of reach. The more important question is whether that engagement becomes durable, profitable activity. Prediction markets may generate excitement because they expand the menu of sports-related outcomes, but they also require trust, liquidity, clear rules and a product experience that can compete with both sportsbook parlays and fantasy contests.
The company’s 2027 outlook assumes a substantial step-up in Predictions revenue and a rebound in adjusted EBITDA to US$800 million to US$1 billion. That implies DraftKings expects the current spending cycle to moderate and the new product to scale with better unit economics. Investors will be watching whether promotional costs decline, whether repeat engagement strengthens and whether the core sportsbook and igaming businesses can keep producing enough margin to support the expansion.
The third-quarter results therefore represent more than a temporary earnings reset. They show DraftKings choosing growth optionality over near-term profitability in a market where competitors are pursuing different playbooks. The company has spent years building scale in regulated online betting. It is now betting that the same customer base, technology stack and brand can carry it into a broader sports trading category before rivals define it first.
