DraftKings Cuts 2026 EBITDA Outlook to $175–275M as Predictions Spend Reaches $650–700M
DraftKings cut 2026 adjusted EBITDA guidance to $175–275M on $650–700M of Predictions spending, and issued 2027 targets after Q3 revenue rose 16%.
DraftKings cut its 2026 adjusted EBITDA guidance to $175–275M on 5 November 2026, saying its Predictions investment of $650–700M is the main cause, and CEO Jason Robins defended the spending on the company's Q3 earnings call on 6 November.
The Boston-based operator also issued its first 2027 guidance, which still carries a sizeable Predictions cost. Shares fell sharply after the call; PYMNTS reported a drop of about 20%.
Q3 results: revenue up 16%, EBITDA loss on Predictions spend
Q3 revenue was $1,329M, up $185M or 16% from $1,144M a year earlier, according to DraftKings' Form 8-K filed with the US Securities and Exchange Commission (SEC). Customer metrics improved:
| Metric | Q3 2026 | Change |
|---|---|---|
| Revenue | $1,329M | +16% |
| Monthly unique payers | 4.1M | about +13% |
| Average revenue per monthly unique payer | $109 | about +3% |
| Sales and marketing expense | $605.7M | +68% (from $360.4M) |
The cost line explains the guidance change. Call coverage from MarketBeat puts the Q3 adjusted EBITDA loss at about $317M, which the CFO attributed mainly to Predictions investment. Robins said more than 1.6M customers have engaged with Predictions this year.
DraftKings says mobile sports betting is live in 27 states, Washington DC and Puerto Rico, and iGaming in 5 states.
Guidance: 2026 reset and first 2027 targets
The 2026 reset is steep on profit and modest on revenue. The company says the cut primarily reflects higher Predictions investment. Predictions revenue will be immaterial in 2026 because new-customer promotions offset most gross revenue.
| Guidance item | 2026 (new) | 2027 (new) |
|---|---|---|
| Total revenue | $6.35–6.55B | $7.35–7.75B |
| Total adjusted EBITDA | $175–275M | $800M–$1.0B |
| Core revenue | n/a | $6.7–7.0B |
| Core adjusted EBITDA | $875–925M | $1.15–1.25B |
| Predictions revenue | Immaterial | $650–750M |
| Predictions EBITDA investment | $650–700M | $250–350M |
Prior 2026 guidance was revenue of $6.5–6.9B and adjusted EBITDA of $700–900M, according to MarketBeat's call summary. Q4 Predictions investment is expected at $175–225M.
DraftKings did not publish a single "$1B" figure. The two Predictions budgets add up to $900M–$1.05B over 2026 and 2027, which analysts have rounded to $1B. The company ties the lower core-business outlook of $875–925M to more iGaming investment and "modestly customer-friendly" sports outcomes.
Payback math and the 2028 downside case
Robins told analysts the 2026 customer cohort is on track to repay its acquisition costs in about 20 months, against a two-year target, per MarketBeat. He said that if sports contracts were to end in July 2028, the 2026 cohort would already have paid back. The 2027 cohort would repay within four years, partly through other products. He also acknowledged that outcomes between "all continue" and "all eliminated" are possible, and said DraftKings would monitor regulation when deciding how much to invest.
SBC Americas modeled the downside: it assumes sports contracts end on 31 July 2028 and that a Predictions customer then generates 20% of today's gross profit. Under those assumptions payback stretches from 18 to 41 months.
Volume is growing quickly. According to MarketBeat, annualized Predictions consumer volume reached $10.1B in October, nearly triple July, and annualized total volume traded hit $56.8B. Robins called DraftKings the third-largest Predictions exchange by total volume. That fits the sector trend in Jefferies' record October prediction market volume data, though DraftKings' own volume is a small slice of the whole.
Analysts pushed back. According to the Motley Fool transcript, one analyst argued that players prefer traditional online sports betting to prediction markets and referred to roughly $1 billion of losses across this year and next.
Legal backdrop: courts are split on sports event contracts
The 2028 scenario rests on court and regulatory outcomes. Kalshi is a prediction market exchange regulated by the Commodity Futures Trading Commission (CFTC), and the core dispute is whether federal law pre-empts state gaming rules for its sports contracts.
According to Legal Sports Report, the Ninth Circuit denied Kalshi's petitions for panel rehearing and rehearing en banc in the Nevada case on 4 November. Kalshi now has 90 days to petition the US Supreme Court. LSR says the panel's August ruling found Kalshi's sports contracts likely are not "swaps," so federal law likely does not pre-empt Nevada's gaming laws. The Sixth Circuit went further, allowing Ohio and Tennessee to enforce their laws, while the Third Circuit ruled for Kalshi in New Jersey in April 2026. New Jersey has a petition pending at the Supreme Court as Docket No. 26-299. The court has not agreed to hear any of these cases.
State-level pressure continues in parallel. Ohio told licensees to cut ties with prediction markets, as covered in Ohio's October 30 license warning, while Kalshi has gone on offense in its federal suit against Louisiana officials. In Illinois, a preliminary injunction on licensing and tax rules went the other way for event contract operators.
For operators, the practical read is that DraftKings is pricing a scenario in which state-by-state rulings, not one national answer, decide how long sports contracts stay available. Sector data on record prediction market activity against flat sportsbook handle shows why the company is willing to spend ahead of that outcome.
Status reviewed on 6 November 2026. Financial figures come from DraftKings' 8-K filed with the SEC on 5 November 2026, supplemented by call coverage from MarketBeat and SBC Americas. More business news and North America coverage.
Frequently asked questions
How much is DraftKings investing in Predictions?
DraftKings expects Predictions investment of $650–700M in 2026, including $175–225M in the fourth quarter, and $250–350M in 2027. Together that is $900M–$1.05B over two years. The company did not announce a single $1B figure; that rounding comes from analyst commentary.
What is DraftKings' new 2026 guidance?
DraftKings now guides to 2026 revenue of $6.35–6.55B and adjusted EBITDA of $175–275M. Prior guidance, per call coverage from MarketBeat, was revenue of $6.5–6.9B and adjusted EBITDA of $700–900M. The company attributes the cut primarily to higher Predictions investment.
How long will DraftKings take to recoup its Predictions customer acquisition costs?
Jason Robins said the 2026 cohort is on track to repay acquisition costs in about 20 months, against a two-year target. SBC Americas reports a downside model, assuming sports contracts end on 31 July 2028 and customers then generate 20% of today's gross profit, that stretches payback from 18 to 41 months.
Why did DraftKings stock fall after Q3 earnings?
Shares dropped sharply on 6 November, with PYMNTS reporting a fall of about 20%. Investors reacted to the lowered 2026 EBITDA outlook, a Q3 adjusted EBITDA loss of about $317M, and heavy spending on Predictions, which the company says will produce immaterial revenue in 2026.
What legal risk do sports event contracts face?
Courts have split on whether federal law pre-empts state gaming rules for Kalshi's sports contracts. Legal Sports Report says the Ninth Circuit denied rehearing on 4 November, the Sixth Circuit allowed Ohio and Tennessee enforcement, and the Third Circuit sided with Kalshi in April 2026. Supreme Court review is possible but not granted.
