DraftKings has lowered its full-year 2026 adjusted EBITDA forecast by as much as $625 million as investment in its prediction markets business weighs on profitability, despite a 16% increase in third-quarter revenue.
The company now expects adjusted EBITDA of $175 million to $275 million, compared with its previous forecast of $700 million to $900 million. Revenue guidance was also reduced to $6.35 billion to $6.55 billion from $6.5 billion to $6.9 billion.
The revised outlook follows a third quarter in which DraftKings reported a net loss of $468.7 million, compared with $256.8 million a year earlier, as higher operating expenses offset revenue growth.
For the nine months ended September 30, the company’s net loss reached $515.3 million, nearly three times the $132.7 million recorded in the corresponding period of 2025. Revenue increased 9% to $4.42 billion, but operating losses widened from $167.6 million to $555.5 million.
Pre-tax losses for the nine-month period rose to $527.6 million from $140 million, while adjusted EBITDA shifted to a loss of $34.4 million from a positive $276.8 million a year earlier.
DraftKings attributed much of its reduced annual earnings outlook to planned investment of $650 million to $700 million in its Predictions business, which allows customers to trade event contracts. Additional iGaming investment and customer-friendly sporting results also affected the forecast.
The company expects Predictions to contribute minimal reported revenue in 2026, with customer promotions offsetting most of the gross revenue generated. Adjusted EBITDA investment in the business is projected at $175 million to $225 million during the fourth quarter alone.
Meanwhile, DraftKings expects its core sportsbook and iGaming operations to generate adjusted EBITDA of $875 million to $925 million for the full year.
The expansion comes amid growing competition in prediction markets, where DraftKings and FanDuel have introduced products targeting customers in states without traditional sports betting. Both companies face competition from established prediction market platforms, including Kalshi and Polymarket.
Despite the near-term earnings impact, DraftKings expects Predictions to generate revenue of $650 million to $750 million in 2027, contributing to a companywide revenue forecast of $7.35 billion to $7.75 billion. The midpoint represents approximately 17% growth, while the upper end is 18.3% above the upper end of the revised 2026 forecast.
Core business revenue is projected at $6.7 billion to $7 billion next year, with adjusted EBITDA of $1.15 billion to $1.25 billion. Further Predictions investment of $250 million to $350 million is expected to bring consolidated adjusted EBITDA to between $800 million and $1 billion.
DraftKings CFO Alan Ellingson
“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,” DraftKings CFO Alan Ellingson said.
In the third quarter, sports revenue, including betting and prediction markets, increased 32% to $783.6 million, supported by a 22% rise in sports consumer volume to $13.9 billion. Sports net revenue margin improved from 5.2% to 5.6%. iGaming revenue rose 2% to $460.9 million, while other activities contributed $84.5 million, bringing total quarterly revenue to $1.33 billion.
Monthly unique payers increased 13% to 4.1 million, while average revenue per monthly unique payer rose 3% to $109. However, sales and marketing expenditure surged 68% to $605.7 million, while revenue costs increased 15% to $900 million. Product and technology expenses, along with general and administrative costs, also increased.
Consequently, the quarterly operating loss widened to $493.1 million from $271.9 million, while the pre-tax loss rose to $478.7 million from $270.5 million. A $7.3 million tax benefit and a $17.3 million loss from equity method investments contributed to the final net result. Adjusted EBITDA losses increased to $316.9 million from $126.5 million.
DraftKings founder and CEO Jason Robins
DraftKings founder and CEO Jason Robins said customer engagement with Predictions had exceeded 1.6 million during the year.
“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,” said DraftKings founder and CEO Jason Robins.
“More than 1.6 million customers have engaged with Predictions year-to-date. Combined with the strength of our core, we believe we are set up for an exceptional 2027.”
