DraftKings’ Robins cites strong performances across all segments as revenue increases in third quarter
Jason Robins really wasn’t chiding analysts on missing an element of DraftKings’ performance.
But during the third-quarter earnings call, Robins reminded everyone about how remarkably the company is faring.
“I think the fact that we’ve been doing so well, we’ve actually been able to have strong share performance,” he said Friday morning. “iGaming share, we’ve gained now for three consecutive quarters, all while making the headway we made in prediction (markets). That really, to me, is a great story. How many companies are able to do that to really maintain the level of performance that we have, and even grow our share in the core business, while also rapidly creating the best sports product in the market and becoming a quick number three exchange in a nascent market that nobody thought we could compete in this quickly?”
DraftKings reported revenue for the third quarter was US$1.3 billion, an increase of US$185 million, or 16%, compared to US$1.1 billion million during the same period in 2025.
Robins said DraftKings performance was in part because of being able to offer via prediction markets sports events in areas where the operator previously could not operate. Even the headwinds that may arise if the Supreme Court decides sports prediction markets are illegal can’t derail the optimism he feels for DraftKings.
“That’s why we targeted shorter payback periods and we modeled out what happens if the court does rule negatively, and how do we look at the payback periods in those scenarios?” Robins said. “But really, we felt like there was a justification to even spend more than we did. We didn’t feel like we were already at a point that we were getting saturation. So really, I think it was based on pure data.”
Robins noted that the idea that any Supreme Court ruling on prediction markets will be binary might not consider other options.
“I think if you look at the most likely of those scenarios, probably the most severe would be all sports contracts go away,” Robins said. “So, if that’s the case, then what do the paybacks look like? That’s why we looked at those two. It’s sort of like two ends of the spectrum.
“There’s obviously a lot of in-between things that could happen,” he added. “There’s delays that could drag it out and make litigation take longer. That would obviously extend out an end decision, which is a different set of math, too. Those were all things that we weighed in. But we wanted to feel good that even in the case that probably the most significant, rollback of all sports contracts, that was likely an outcome, we wanted to feel good that even in that case we were getting paybacks that were acceptable to us.”
Robins said that interest in prediction markets has had a halo effect on other DraftKings products. Notably, lottery and daily fantasy sports have benefited.
“We do have other products that we are able to engage customers on. We’re seeing very strong cross-sell onto many of those products,” Robin said. “I do think there is a halo effect in terms of the ongoing (long-term value) of those customers.
“But in terms of the brand halo in states that have OSB and iGaming, it really probably had a minimal impact, if any at all, because the vast majority of the incremental spend was done at a local level.”
DraftKings on 20 October exited the Utah market, removing all prediction market contracts related to sports, politics, and novelties. Robins said the company is always monitoring states’ regulatory rulings in order to avoid litigation.
“I generally think that most states are waiting to see what the courts decide before taking more severe action,” Robins said. … “Obviously, this is all going to play out at the courts at some point. One way or another, it’s going to resolve, and there will be clarity.”
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
Prediction markets moved from option to strategy
DraftKings’ latest results landed after a year in which prediction markets shifted from a monitored opportunity to a central growth strategy. The company’s message to investors has been consistent: Its core sportsbook and iGaming businesses remain strong enough to fund a push into event contracts, particularly in states where online sports betting is not legal.
That framing matters because DraftKings is not treating predictions as a side project. The company first described the category as an area to watch, then moved to acquisition, launch planning, national media integration and substantial marketing investment. Each step has raised the stakes with regulators, rival operators and investors trying to determine whether federally regulated event contracts will complement or disrupt the state-by-state sports betting model.
The company’s position has also evolved with its financial performance. Strong quarterly revenue, expanding iGaming share and a maturing online sports betting business gave management more flexibility to chase a market that could open California, Texas, Georgia and other non-sports betting states to products tied to sports outcomes. That opportunity explains why Chief Executive Jason Robins has repeatedly described prediction markets as one of the company’s biggest growth openings since the fall of the federal sports betting ban in 2018.
From wait-and-see to acquisition
DraftKings’ pivot did not begin with a full commitment. During the company’s second-quarter earnings call, Robins said DraftKings was still evaluating the space and weighing relationships with state regulators, tribes and other stakeholders. As DraftKings monitored prediction markets after record second-quarter revenue, management described the company as being in “monitor mode,” watching how competitors and regulators handled event contracts.
That caution reflected the central tension in the category. Prediction markets can operate under the oversight of the Commodity Futures Trading Commission, while sports betting is regulated and taxed by individual states. For gaming companies built around state licenses, moving too quickly risked angering regulators in jurisdictions that already scrutinize sports betting advertising, responsible gambling practices and tax compliance.
By the fall, DraftKings had moved beyond observation. The company acquired Railbird Technologies, a CFTC-registered exchange, in a transaction that signaled a clear path into federally regulated event contracts. A CDC Gaming report said DraftKings bought Railbird to enter event contracts, giving the company infrastructure it could eventually use to expand access across states. DraftKings also told policymakers in licensed states about its rationale, an effort to preserve relationships even as its business model moved toward a federally supervised product that some state regulators view skeptically.
Media partnerships became part of the launch plan
The Railbird deal coincided with another strategic move: DraftKings’ partnership with ESPN. The agreement made DraftKings the sole official sportsbook and odds provider for ESPN beginning Dec. 1, creating a marketing and engagement channel that could support both traditional sportsbook products and the emerging predictions business.
Yet when DraftKings discussed the ESPN agreement with investors, analysts focused heavily on predictions. In an earnings call centered on prediction markets and the ESPN partnership, Robins said DraftKings Predictions could enter many new states with sports event contracts, unlocking customers outside the legal online sports betting footprint. He also said nearly half the country still lacked access to legal online sports betting, making those states the largest opportunity.
The ESPN relationship matters because DraftKings already spends heavily to reach sports fans nationally. Robins has argued that the company can repurpose much of that spending for predictions rather than building a new marketing engine from scratch. ESPN’s fantasy sports database, app audience and sports content could help DraftKings explain event contracts to users who already engage with odds, fantasy contests and live sports data.
That same logic shaped DraftKings’ later emphasis on media scale. The company has said partnerships with ESPN and NBCUniversal can help it create a real-time product around sports events. For a market still unfamiliar to many consumers, distribution and education may be as important as pricing models or liquidity.
The rollout exposed regulatory fault lines
DraftKings’ formal prediction-market rollout showed how carefully the company is navigating state concerns. In December, the company announced DraftKings Predictions across 38 states and the District of Columbia, but it did so through CME Group rather than Railbird at launch. As DraftKings launched its prediction market without Railbird, the company said a planned Railbird rollout would follow and could deliver better economics over time.
The state map was uneven. DraftKings planned full sports event contracts in 17 states, while Washington, D.C., and 21 states were to receive a narrower set of non-sports markets. The company blacked out several states, including Nevada, Illinois, Pennsylvania, Ohio and Arizona, after discussions with regulators and amid uncertainty over how states would respond.
The launch followed DraftKings’ resignation from the American Gaming Association, a trade group that had criticized prediction markets as insufficiently regulated compared with state-licensed sportsbooks. FanDuel also left the group as it pursued the category. The split underscored a widening divide inside the gaming industry: major sportsbook operators see event contracts as a growth opportunity, while some industry advocates and state stakeholders view them as a threat to tax revenue, licensing systems and responsible gambling safeguards.
DraftKings has tried to blunt that criticism by extending responsible-gambling concepts into what it calls responsible trading. Its program includes deposit limits, cool-off periods, self-exclusion tools and educational materials. Still, the central dispute remains unresolved: whether sports event contracts are financial products under federal commodities law or sports wagers that states can restrict.
Investment plans raised both upside and risk
By early 2026, DraftKings was no longer speaking cautiously. In a fourth-quarter call outlining plans to go full bore into prediction markets, Robins said the company intended to deploy growth capital to build the category and acquire millions of customers. He described predictions as the most exciting new opportunity since the 2018 Supreme Court decision that cleared the way for state-regulated sports betting.
The company later quantified that commitment. In a subsequent earnings call signaling major investment in prediction markets, Robins said DraftKings expected to spend US$200 million to US$300 million during the year, largely on marketing with additional product and technology investment. That spending plan indicated the company was prepared to accept near-term margin pressure to build share in a market it believes could become a multibillion-dollar category.
DraftKings’ confidence rests on assets developed for sports betting: pricing models, trading operations, customer acquisition systems and a large database of sports users. Robins has argued those tools give DraftKings an advantage over prediction-market companies that lack deep sports products. He has also said early customers look similar to sportsbook customers, suggesting DraftKings may not need to invent a new consumer segment.
The risk is legal and political. If courts or regulators sharply restrict sports event contracts, DraftKings could lose access to the most lucrative part of the predictions opportunity. Robins has said the company modeled downside scenarios, including a severe outcome in which sports contracts disappear, and still found acceptable payback periods. That does not eliminate the risk, but it shows DraftKings is treating litigation as a business variable rather than a reason to pause.
Core growth gives DraftKings room to press
The backdrop to the current quarter is that DraftKings’ legacy businesses continue to perform. The company has reported revenue growth across recent quarters, record second-quarter results, improved iGaming share and durable sportsbook engagement. That performance gives management room to argue that predictions are incremental rather than a distraction.
Robins has also said prediction markets can create a halo effect for lottery, daily fantasy sports and other products. In non-sports betting states, predictions could introduce customers to DraftKings’ broader ecosystem. In states with legal sportsbook or iGaming products, the effect may be smaller because the company already has direct channels to those users.
The stakes extend beyond DraftKings. If prediction markets scale, states without legal sports betting may face pressure to authorize sports wagering or iGaming rather than allow federally regulated products to capture consumer demand without state tax structures. Robins has argued that dynamic is beginning to resonate with policymakers, particularly in large states that have resisted online sports betting.
For DraftKings, the strategy is a bet on timing. The company wants to be early enough to shape the market, but not so early that it absorbs avoidable regulatory damage. Its recent results suggest investors will judge the company on whether it can keep expanding its core business while building a defensible position in predictions. That balance is now central to the DraftKings story.
