DraftKings Q3 2026 earnings: revenue up 16% as company targets $700 million in prediction market revenue for 2027

Updated November 6, 2026, with details from DraftKings’ quarterly SEC filing. See the update.

DraftKings reported third-quarter 2026 revenue of $1.329 billion on November 5, up 16% from $1.144 billion a year earlier, and put its prediction market business at the center of the story. In its earnings release and third-quarter business update, the company said more than 1.6 million customers have used DraftKings Predictions so far this year, and it raised what it will spend to grow the product in 2026 to $650 million to $700 million.

The quarter was deep in the red. Adjusted EBITDA was a loss of $316.9 million, against a loss of $126.5 million in the third quarter of 2025, and net loss widened to $468.7 million from $256.8 million. DraftKings cut its 2026 Adjusted EBITDA guidance to $175 million to $275 million, from $700 million to $900 million in August, primarily reflecting the higher Predictions investment.

It also guided to $650 million to $750 million of Predictions revenue in 2027.

“The third quarter marked a pivotal moment for DraftKings, as the Predictions offering we have been building is now powering meaningful growth for our business,” CEO Jason Robins said in the release.

Q3 2026 key numbers

Metric	Q3 2026	Q3 2025	Change
Revenue	$1,329.1 million	$1,144.0 million	+16%
Sports Consumer Volume (sportsbook and prediction markets)	$13.9 billion	$11.4 billion	+22%
Sports revenue (sportsbook and prediction markets)	$783.6 million	$596.1 million	+31.5%
iGaming revenue	$460.9 million	$451.3 million	+2.1%
Other revenue	$84.5 million	$96.6 million	-12.5%
Sales and marketing expense	$605.7 million	$360.4 million	+68%
Net loss	$468.7 million	$256.8 million	wider
Adjusted EBITDA	-$316.9 million	-$126.5 million	wider
Loss per share	$0.94	$0.52	wider
Monthly Unique Payers	4.1 million	about 3.6 million	+13%
Average revenue per MUP	$109	$106	+3%

Source: DraftKings Q3 2026 earnings release, November 5, 2026. Adjusted EBITDA is a non-GAAP measure.

What DraftKings disclosed about Predictions

DraftKings Predictions trades sports on DKeX, the company’s own exchange, and DraftKings owns the brokerage, the exchange and a market maker. The business update gives the most detail the company has published on how the product is trading:

• Volume. In October, annualized Consumer Volume reached $10.1 billion, up nearly threefold from July. Annualized Total Volume Traded, which includes market makers, reached $56.8 billion, up more than fivefold.
• Take rate. Take rates on DKeX trades were about 11.1% in September and October, across brokerage, exchange and market making. DraftKings kept about two-thirds of that gross revenue, and third-party market makers took the rest.
• Combos. Combination contracts made up 27% of Consumer Volume in October, and more than 70% of customers traded at least one that month.
• Markets. DKeX lists more than three times as many game-level markets as its nearest competitor across its largest sports, including the NFL, NBA and college football, by the company’s count.
• Non-sports. Nearly 20% of Predictions customers have traded non-sports markets. Crypto is approaching a double-digit share of total Consumer Volume in recent weeks, and DraftKings is targeting a move of its crypto markets onto DKeX over the next month.

The company describes itself as “the clear number three Predictions exchange by Total Volume.” It did not name the two exchanges ahead of it.

DraftKings expects Predictions revenue to be immaterial in 2026 because new-customer promotions will offset “the lion’s share” of the gross revenue it generates.

Why it is spending more

The business update frames the higher spend as a payback decision. DraftKings expects its 2026 group of Predictions customers to pay back in about 20 months, inside its two-year target, and says that group is already running at about $350 million of annualized adjusted gross profit. It also reports that newly acquired Predictions customers are retaining and engaging in line with sportsbook customers.

Fourth-quarter Adjusted EBITDA investment in Predictions is expected at $175 million to $225 million. For 2027, the company expects that investment to fall to $250 million to $350 million, and says the Predictions customers it is acquiring now should begin contributing meaningful gross profit going into next year. It expects Predictions to add to Adjusted EBITDA in 2028.

The court risk, in the company’s own numbers

The update also models a downside case. “Even if sports contracts were to end in July 2028,” the letter says, DraftKings estimates its 2026 customer group would be fully paid back before that date, and its 2027 group would be more than half paid back, with full payback within four years without sports contracts.

The company calls this “a win-win position no matter how any future court ruling plays out.” It also says it will monitor regulatory developments related to sports predictions and adjust its spending accordingly. Sports event contracts remain the subject of litigation between operators and states, including the Second Circuit cases involving Kalshi and Coinbase.

The core business

Outside Predictions, the sportsbook had a strong quarter. Sportsbook net revenue rose 36% from a year earlier, net revenue margin widened by about 120 basis points to 6.4%, and handle grew 12%. Its sportsbook hold rate passed 11%, and its handle share rose year over year for a fourth straight quarter.

The company also says that prediction market operators are having “no discernible impact” on its sportsbook business.

iGaming grew more slowly. Customer acquisition rose 76% and gross revenue 7%, while net revenue rose 2% as DraftKings invested in promotions for those new customers. October gross revenue growth was 12%.

Core Adjusted EBITDA, which excludes Predictions, is expected at $875 million to $925 million for 2026.

Updated guidance

Guidance	FY 2026 (new)	FY 2026 (August)	FY 2027 (new)
Total revenue	$6.35-6.55 billion	$6.5-6.9 billion	$7.35-7.75 billion
Adjusted EBITDA	$175-275 million	$700-900 million	$800 million-$1.0 billion
Predictions revenue	Immaterial	n/a	$650-750 million
Predictions Adjusted EBITDA investment	$650-700 million	n/a	$250-350 million
Core Adjusted EBITDA	$875-925 million	about $1 billion*	$1.15-1.25 billion

*Not formal guidance: in August, CFO Alan Ellingson said the core business was on track for approximately $1 billion of Adjusted EBITDA this year. Sources: Q3 2026 earnings release and business update; Q2 2026 release, August 6, 2026.

Balance sheet

DraftKings ended September with $1.1 billion in cash and cash equivalents, roughly where it started the year. Term loan debt rose to $1.25 billion from $577 million at the end of 2025, while convertible notes fell to $942 million after the company bought back $300 million of them. Operating cash flow for the first nine months was $63 million, against $342 million a year earlier.

What it means for prediction markets

DraftKings has now put numbers on what a sportsbook-backed prediction market costs to build and what it expects it to bring in. It plans $650 million to $700 million of Adjusted EBITDA investment in Predictions this year and expects $650 million to $750 million of Predictions revenue next year. Its own downside case assumes sports contracts could end in July 2028, and under it only the 2026 customer group pays back in full before then, which is why the company says it will adjust its spending as the courts and regulators act.

Management will discuss the results on a call on Friday, November 6, at 8:30 a.m. ET.

Update, November 6: what the quarterly filing adds

DraftKings filed its quarterly report on Form 10-Q with the SEC on November 6. It adds detail on how the Predictions business is structured and on the lawsuits against it.

How the business is set up. DraftKings Predictions launched in December 2025 as an introducing broker and has operated as a futures commission merchant since August 2026. The company also runs Railbird Exchange LLC, the designated contract market doing business as DKeX, and makes markets on DKeX and other exchanges. Prediction market revenue is reported inside Sports revenue. It comes from brokerage fees, DKeX transaction fees, and trading revenue earned by the market maker, GUS CAP LLC, on DKeX and third-party exchanges.

Where the money went. Sales and marketing rose $245.3 million in the quarter, mainly because of higher external marketing costs tied to prediction markets and the launch of the company’s Super App, along with customer acquisition costs for the FIFA World Cup and launches in new jurisdictions. The filing says promotional spending on the Predictions launch partly offset revenue growth and the rise in Sports net revenue margin.

The lawsuits. The 10-Q describes five suits that challenge DraftKings Predictions:

• Chan (filed July 28, 2026) and Gordon (August 3), putative class actions in federal court in Massachusetts, allege that sports event contracts are unlawful in a list of states and seek damages, restitution and injunctions. The two cases have been consolidated for pre-trial purposes.
• Andrio (August 13, 2026), a putative class action filed in federal court in California alleging the product is illegal, unlicensed sports betting, was transferred to the District of Massachusetts on October 13.
• Hughes (July 29, 2026) uses South Carolina’s Statute of Anne to seek recovery of residents’ alleged gambling losses, with treble damages. It was removed to federal court, and a motion to send it back to state court is pending.
• The Seminole Tribe of Florida sued on October 9, 2026, in Broward County, alleging that Predictions and Pick6 are prohibited gambling in Florida and that only the tribe may offer that kind of gambling under its 2021 compact. It also alleges that Robins violated Florida’s RICO statute.

DraftKings says it intends to vigorously defend these cases and cannot estimate a possible loss.

Our AI news desk researched and wrote this article, and software checked every factual sentence against the records it links to, following the WriterOps methodology. Report an error.