DraftKings Sees Strong NFL Start, Prediction Markets Surge as $1B EBITDA Target Holds

Key Points

• DraftKings reported strong core momentum: Sportsbook handle rose 15% year over year at the start of the NFL season, while the company maintained its target of approximately $1 billion in adjusted EBITDA for 2026.
• Prediction markets are scaling rapidly: Trading volume reached nearly 2.5 times July levels, with more than 1 million customers participating and DraftKings claiming a near-double-digit share of sports prediction-market activity.
• Growth investments and iGaming recovery could support future earnings: DraftKings is considering increased marketing for prediction markets, has regained iGaming share in select states, and continues to target roughly 30% adjusted EBITDA margins in mature sportsbook markets.

DraftKings NASDAQ: DKNG CEO and Chairman Jason Robins said the company is seeing strong early-season engagement across its core sportsbook business and its newer prediction markets offering, while maintaining its expectation of about $1 billion in adjusted EBITDA for 2026.

Speaking with Wells Fargo gaming, lodging and leisure analyst Trey Bowers, Robins said sportsbook handle had risen 15% year over year month-to-date at the start of the NFL season. He also said the company’s iGaming business has begun to regain market share in certain states, with growth accelerating in recent months.

“Really, really healthy trends in the core business,” Robins said. He added that the core business remains on track to deliver approximately $1 billion in adjusted EBITDA in 2026 and should grow “pretty materially” in 2027. DraftKings plans to provide a more detailed 2027 outlook during its November earnings call.

Prediction Markets Volume Rises

Robins characterized prediction markets as a significant growth opportunity, saying customer trading volume had increased to nearly 2.5 times its July level and was continuing to rise weekly. He said DraftKings had approached a double-digit share of consumer volume in sports prediction markets, with a higher share in NFL-related activity.

The company has prioritized major U.S. sports in building its offering. Robins said DraftKings now has three times as many NFL markets as competing prediction products, along with roughly 1.5 times as many college football and Major League Baseball markets.

He said the company has moved rapidly from a product that was not competitive less than a year ago to what it believes is the strongest sports prediction offering in the market. DraftKings is still expanding coverage in some smaller sports, including tennis, he said.

Product breadth, order execution and the ability to combine markets are key differentiators, according to Robins. He said nearly 30% of NFL Sunday prediction-market activity came from combinations, or combos, a level that took DraftKings more than five years to reach in its traditional sportsbook business.

DraftKings is also seeing efficient customer acquisition in states without licensed online sports betting, Robins said. Based on early results, the company expects to increase spending, potentially pulling forward some investment previously contemplated for 2027. He said the spending would include both marketing and customer promotions, though the ultimate amount remains data-dependent.

Universal Account and Cross-Sell Efforts

Robins said DraftKings’ universal account experience is now operating in most states, allowing customers in many jurisdictions to access their accounts and balances more seamlessly while traveling. A handful of states have not yet fully integrated, he said.

The company has more than 1 million customers who have engaged with its prediction product, according to Robins, and he expects that total to reach multiple millions by the end of the NFL season. Growth has been strongest in large states without legal online sports betting, including California, Texas, Florida and Georgia.

DraftKings has also seen meaningful conversion from its existing customer base. Robins said the company is cross-selling double-digit percentages of acquired prediction customers into products including Pick6, lottery and daily fantasy sports. He said some users are also converting into crypto trading, which he described as a potential additional contributor to the business.

On the unsettled legal and regulatory environment surrounding prediction markets, Robins said DraftKings is seeking clarity but does not control court outcomes. He argued the company is positioned to benefit whether sports prediction markets remain available or are restricted, citing the strength of its established sportsbook and other digital gaming products.

“We are well set up regardless of the outcome,” Robins said, while adding that he would prefer prediction markets to remain available because they represent an incremental total addressable market.

iGaming Recovery and Margin Targets

Robins said DraftKings has regained share “pretty substantially” in a couple of iGaming states, supported by new content, product features and marketing execution. He cited the online launch of Lightning Link, a game previously unavailable online, as well as improvements to the company’s daily rewards program.

The company expects to launch iGaming in Maine later this year, where Robins said DraftKings and Caesars would be the sole operators. He also pointed to momentum for additional iGaming legalization in the Washington, D.C., Maryland and Virginia region, though he declined to forecast which states might act or when.

For existing online sportsbook states, Robins said DraftKings continues to target an adjusted EBITDA margin of roughly 30%, plus or minus a couple hundred basis points. He cited higher parlay mix, cost-control initiatives, declining general and administrative expenses and lower marketing needs as markets mature as factors that could support future earnings growth.

Robins said DraftKings’ primary capital-allocation focus remains organic growth rather than acquisitions. While the company continues to evaluate potential deals, he said it does not currently see a pressing need for acquisitions and believes it has a substantial growth opportunity through its existing businesses.

About DraftKings (NASDAQ:DKNG)

DraftKings Inc is a digital sports entertainment and gaming company that operates online sports betting, iGaming and daily fantasy sports platforms. Its products enable customers to place bets on professional and collegiate sports, play online casino games where permitted, and participate in fantasy contests across a range of sports.

The company also offers related services, including retail sportsbooks in select jurisdictions and sports media content through DraftKings Network. Its offerings are available in U.S.

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