DraftKings turned in one of its strongest quarters ever in Q2 2025, posting record sportsbook revenue, an all-time high profit margin, and its second-ever net profitable quarter.
DraftKings reported $1.5 billion in total revenue, up 33% year-over-year, and reported $158.3 million in net income, its largest quarterly profit to date. Adjusted EBITDA rose to $301 million, more than double the same period last year, as DraftKings expanded its gross margin to 48% and posted $129 million in free cash flow. But despite headline-grabbing numbers, investors balked.
DKNG shares jumped 8% in premarket trading Thursday morning but gave back those gains after the company’s earnings call. The stock closed at $45.20, down 0.4% on nearly 2.5 times its average volume.
Unpacking record DraftKings sports margins
DraftKings delivered a company-record 8.7% sportsbook net revenue margin, up 2.3 percentage points year-over-year and well above the 7.0%–7.5% range executives projected just one quarter ago.
Sportsbook revenue climbed 45% to $998 million, while betting volume rose just 6% to $11.5 billion. Structural hold also improved 1 percentage point to 10.9%, driven by increased parlay mix (up 4.3 percentage points) and live betting handle.
Roughly $110 million of quarterly revenue came from “better-than-expected” sports outcomes, CEO Jason Robins said. That helped erase damage from last NFL season and March Madness which led DraftKings to cut its full-year outlook.
Barry Jonas of Truist noted that Q2 outcomes “weren’t favorable enough to take up 2025 guidance,” putting added pressure on Q3.
Live betting carries handle growth
Handle growth slowed from Q1’s 16% pace, but still outperformed several peers. Live betting accounted for more than double the overall handle growth, rising 16% year-over-year and becoming the largest segment in “many markets,” according to Robins.
“We are the leader right now and have by far the best offering,” Robins said. “We had over 90% uptime in all of our core live markets last quarter, which is an industry leading number.
“I think one, it’s going to be the source of handle growth for the industry in the next probably couple of years… we’re really playing from a position of strength in the area that’s likely to be the biggest source of growth for the handle side of the OSB market in the next few years.”
The company also cut promotional reinvestment as a share of gross revenue by 6 percentage points year-over-year, helping drive its 48% gross margin. That pullback came as more revenue came from retained users in mature states, requiring less acquisition-heavy spend.
Player growth slows to pre-pandemic levels
Monthly unique players grew just 6%, the slowest rate since DraftKings went public in 2020.
“The biggest thing that happened with MUPs was you know last year we had Jackpocket, but we didn’t have Jackpocket Texas, which was a very large state for the lottery business and obviously losing that cost them MUPs and… affected the numbers year over year,” Robins said.
“Keep in mind too, for us, 20% of customers is still millions of people,” Robins siad. “A lot of the people at the bottom end are spending 25, 50 cents, a dollar on bets. So it doesn’t take much to be in the top 20% of customers.”
Average revenue per MUP rose 29% to $151. Robins said engagement remains strong but acknowledged growth is now driven more by existing users betting more often than by new customer acquisition.
Full-year guidance reflects that trend, with flat user growth expected in the second half. Executives cited mature-state cohorts and the Jackpocket acquisition as key revenue drivers moving forward.
DraftKings in ‘monitor mode’ on predictions
DraftKings continues to evaluate federally regulated prediction markets but has yet to commit to a formal move. The firm is reportedly in talks to acquire a recently licensed exchange, which could offer access to a betting-style product across all 50 states.
“We continue to monitor events surrounding federally regulated prediction markets and are actively exploring ways to enhance shareholder value through this opportunity,” Robins said. “We value our relationships with both industry stakeholders and policymakers and will work collaboratively as we evaluate next steps.”
The company’s guidance does not include any revenue from a potential prediction markets product. Robins said DraftKings remains in “monitoring mode,” with decisions likely hinging on how operators like Kalshi, Robinhood, and Polymarket navigate legal and regulatory uncertainty.
NFL season will be key
Executives reiterated full-year guidance of $4.9 billion in revenue and $1.8 billion in Adjusted EBITDA, implying a more moderate second half as some Q2 margin gains normalize. The company expects structural hold to remain strong but closer to the 10% range.
They also advised a $35 million impact to EBITDA from launching in Missouri, which is slated for December.
Citizens analyst Jordan Bender described the outlook as conservative and said “in-line game outcomes should lead to its beating estimates in 2H25.”
