DraftKings raises Predictions spend to $650–$700M and cuts 2026 EBITDA guidance

DraftKings announced on 5 November it will raise its investment in Predictions to between $650 million and $700 million in 2026 and that, as a result, it is cutting its adjusted EBITDA guidance for the year to $175 million–$275 million, down from the prior range of $700 million–$900 million. The move reduces the guidance midpoint by $575 million and stems from a capital allocation decision the company says will fund growth of its prediction markets product.

Third‑quarter results and revised guidance

DraftKings reported third‑quarter revenue of $1,329 million on 5 November, an increase of 16% from $1,144 million a year earlier. The company recorded a net loss of $468.7 million, versus a loss of $256.8 million the prior year. Adjusted EBITDA was a loss of $316.9 million, compared with an adjusted loss of $126.5 million in the prior period.

Sales and marketing rose 68.1% to $605.7 million, which DraftKings attributes mainly to marketing for its Predictions marketplace and the launch of its Super App. Revenue guidance for 2026 was revised to $6.35 billion–$6.55 billion, down from the prior $6.5 billion–$6.9 billion range communicated in May and August.

"Investments in Predictions and modestly customer‑favourable sports results explain the gap," the company said in its quarterly filings.

Predictions: metrics and payback assumptions

According to the shareholder letter and quarterly presentation materials, more than 1.6 million customers have interacted with Predictions in 2026. Consumer annualised volume reached $10.1 billion in October, nearly three times the July level.

DraftKings recorded a combined take rate of 11.1% on consumer volume in September and October; of that portion the company retained 65.6%. The company estimates the 2026 cohort will pay back in roughly 20 months under its internal model, and it lays out a downside case where sports contracts run until 31 July 2028. Under that scenario, the 2027 cohort would be more than half paid by then and fully paid within four years if gross profit per customer falls to 20% of the sports level.

DraftKings said Predictions revenue will be "immaterial" in 2026 because promotions to new customers offset most gross revenue.

Impact on 2027 and legal assumptions

For 2027 the company guides revenue of $7.35 billion–$7.75 billion and adjusted EBITDA of $800 million–$1.0 billion, after adding another $250 million–$350 million of investment in Predictions. For the core business, DraftKings expects adjusted EBITDA of $875 million–$925 million in 2026; in August CFO Alan Ellingson had said the core was on track to produce around $1,000 million.

On the 6 November call, CEO Jason Robins described a base case of a Supreme Court resolution by mid‑2028, and the company acknowledges that an earlier decision or tighter state pressure would shorten the window its model needs to reach payback. [See more on regulation](/regulation)

Sportsbook and iGaming performance

Sportsbook handle grew 12% and sportsbook net revenue rose 36%, with an approximate margin of 6.4%, an increase of about 120 basis points, and hold above 11%. iGaming revenue grew 2.1% to $460.9 million, while iGaming gross win rose 7%; the difference was absorbed by promotions that drove a 76% increase in customer acquisition. (Read more on sportsbook trends)[/sports] and iGaming metrics may be found in our [/casino] coverage.

Gaming taxes increased by $64.4 million to $519.9 million; the filings do not detail the Illinois betting fee or quantify other state changes.

Letter to Congress and VIP programme

On 6 November DraftKings responded to an inquiry from Senator Richard Blumenthal and Representatives Paul Tonko and Valerie Foushee with a six‑page letter stating it "does not target its products to anyone based on problem‑gambling indicators." The company said less than 1% of its customers are in Diamond and Onyx loyalty tiers, and declined to disclose average losses of rewards members as "competitively sensitive."

Comparison with FanDuel and spending strategy

DraftKings is spending more than FanDuel: Flutter estimates a prediction‑markets loss for 2026 of about $200 million, with an average of 66,000 monthly players and $119 million of volume in the third quarter. DraftKings says it is spending more than three times that amount on Predictions; its reported sportsbook margin is 6.4%, versus the 6.8% Flutter reports for FanDuel’s U.S. business.

Analysts and markets reacted: InGame reported shares fell as much as 29% to $16.60 on 6 November, the lowest level since 2023.

Technical conclusion on the announcement

The reduction in 2026 adjusted EBITDA guidance came mainly from a capital allocation decision toward Predictions and marketing spend, not from an operational failure in the sportsbook. DraftKings maintained that future profitability depends on Predictions performance per its internal model and on the timetable of judicial and regulatory decisions.