DraftKings Profit Beat Puts Prediction Markets in Focus

DraftKings reported Q1 2026 revenue of $1.65 billion, up 17% year-on-year and marginally ahead of analyst estimates. The Boston-based operator also swung to a net profit of $21.1 million from a $33.9 million loss in the same period last year.

Adjusted EBITDA reached $168 million, up 64% and above Wall Street projections of $153 million. The company maintained its full-year 2026 guidance of $6.5–$6.9 billion in revenue and $700–$900 million in adjusted EBITDA.

Sportsbook led the quarter, with revenue up 24% to $1.1 billion. CEO Jason Robins attributed the performance to stronger product offerings and deeper media integrations. He said revenue growth exceeded 20% across nearly all major sports.

The weak point was customer activity. Monthly unique players fell 4% to 4.2 million, below analyst expectations of 4.6 million. DraftKings attributed the decline to its exit from the Texas lottery market rather than weakness in its core sportsbook and casino business.

Prediction Volume Crosses $1B

Prediction markets took the largest share of Robins’ forward-looking commentary. DraftKings first launched its prediction markets product in December and has since added it to its flagship app. In April, annualised consumer volume topped $1 billion, with total annualised volume above $2.3 billion. Those figures were up 38% and 43% respectively from March.

Customer acquisition costs for the product fell more than 80% in April after the app integration. Robins said DraftKings’ core business strength and improved profitability give the company room to invest further in prediction markets, including app integration, market-making capabilities, a proprietary exchange and prediction market parlays.

DraftKings has also launched prediction market-making, which Robins said already generates positive returns. Its current prediction markets product is partnered with CME Group. Robins said DraftKings expects to launch its proprietary exchange and prediction market parlay products in the coming weeks.

Cannibalisation Question Stays Central

Robins maintained that prediction markets are not cannibalising DraftKings’ regulated sportsbook business, citing internal and third-party data that points to impact mainly confined to low-margin wagers. Research from EKG, cited by DraftKings, found that nearly 70% of sports prediction market volume comes from states without legal online sports betting.

Robins also acknowledged that some third-party data shows prediction market customers lose funds more quickly than sportsbook customers. He said DraftKings intends to grow prediction markets with consumer protections and responsible engagement standards.

DraftKings shares slipped less than 1% in after-hours trading after the results. The stock had fallen 27% year-to-date through May 7.

💡 TGJ Take

DraftKings’ Q1 numbers give it more room to push into prediction markets as federally regulated exchanges expand across the US. The 80% drop in customer acquisition costs after app integration is the efficiency metric rivals will watch. For operators, the EKG data point matters: if nearly 70% of sports prediction volume comes from states without legal online sports betting, this may be incremental revenue rather than direct cannibalisation. Robins’ customer protection caveat also matters because customers who lose funds more quickly will attract regulator attention. The pressure on US operators is shifting: sportsbook rivals remain the core fight, but federally regulated prediction exchanges now create a second growth channel with different tax and compliance dynamics.