DraftKings reported a 16% year-over-year revenue increase during the third quarter of 2026 in Thursday’s earnings release while also announcing plans for a heavier investment in the company’s growing prediction market product.
- DraftKings’ sports net revenue margin increased from 5.2% in Q3 2025 to 5.6% in the latest quarter, leading to the gains.
- The operator reported that the prediction market product’s annualized trading volume has grown five times from July to October.
- DraftKings expects a $175 million to $225 million Predictions investment during Q4.
The online sports betting, iGaming, and predictions operator reported $1.33 billion in total revenue, up from $1.14 billion produced in Q3 2025. The growth was due to higher product engagements and a sports net revenue margin that climbed from 5.2% to 5.6% during the three-month period ending Sept. 30 that includes the start of the NFL and college football seasons.
Revenue costs rose to over $900 million in Q3 from $784 million. The company also finished with an Adjusted EBITDA loss of $316.9 million.
Growing product
Prediction markets garnered significant praise from DraftKings CEO and co-founder Jason Robins.
“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,” Robins said in a statement. “More than 1.6 million customers have engaged with Predictions year-to-date, and combined with the strength of our core, we believe we are set up for an exceptional 2027.”
DraftKings reported that its prediction market product has grown five times since July 2026, reaching $56.8 billion in annualized total volume traded. That included $10.1 billion in consumer volume.
The company said DraftKings Predictions is third among all trading exchanges, and the platform produced an 11.1% take rate, leading to DraftKings capturing 65.6% of the product’s gross revenue. DraftKings also reported that October’s annualized run-rate adjusted gross profit reached $350 million, with an 18% promotion rate.
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Predictions investment
Success of DraftKings Predictions has the operator changing two guidance points to account for higher investments.
The fiscal-year 2026 Adjusted EBITDA range of $175 million to $275 million reflects a Predictions investment of $650 million to $700 million, with $175 million to $225 million coming during the fourth quarter. However, revenue from the prediction market product will be “immaterial” in FY 2026, DraftKings said, as new customer promotions are expected to offset gross revenue generated during that time.
“Our core business continues to generate significant free cash flow, which we are deploying to fund growth in our Predictions business at attractive payback periods,” said Alan Ellingson, DraftKings’ Chief Financial Officer. “We are introducing fiscal year 2027 revenue guidance of $7.35 billion to $7.75 billion, an increase of 17% year-over-year at the midpoint, and Adjusted EBITDA guidance of $800 million to $1 billion, which includes $300 million of Adjusted EBITDA investment in Predictions at the midpoint.”
Sports revenue spikes
DraftKings generated $13.9 billion in consumer volume in Q3 from its sportsbook and prediction market product, up 22% year over year. Revenue from sports betting, which is live in 27 U.S. states, and predictions reached $784 million, a 31.5% spike from Q3 2025, when the trading exchange had not yet launched. The latest quarter was also the first since DraftKings launched sports betting and iGaming in the Canadian province of Alberta.
The operator’s 6.7% win margin for the first nine months of 2026 is equal to the same hold at the same point last year.
Online casinos, experienced a more modest 2.1% year-over-year revenue growth, reaching $460.9 million in Q3. iGaming for the year is up a more significant 6.1% compared to the first nine months of 2025.
Monthly unique players grew by 13% during the third quarter, reflecting “strong unique player retention and new customer acquisition" in all three products, DraftKings said. Average revenue per MUP rose 3% to $109 in Q3, driven by the sports margin increase.
The company will hold an earnings call on Friday morning.
