DraftKings expects its adjusted EBITDA to hit $1 billion at the top end of their guidance range, the company said Thursday in its Q3 earnings report.
The core sports betting and online casino business is forecasted to hit $1.2 billion in adjusted EBITDA at the midpoint. Further investment in DraftKings Predicts to the tune of a projected $300 million at the midpoint will drag adjusted EBITDA for the whole company between $800 million and $1 billion.
DraftKings also raised how much it expects to invest in predictions this year. CEO Jason Robins said customers are paying back faster than expected.
“Due to the compelling data and excellent returns we are seeing year-to-date, we have increased our 2026 Adjusted EBITDA investment in Predictions to $650 million to $700 million,” Robins wrote in the company’s business update. “Our Predictions customers are highly engaged, retaining at high levels and trading significant volume. In totality, we expect our 2026 cohort to pay back in approximately 20 months, well below our two-year payback target.”
While Robins is bullish on the increased predictions investment, it does not appear the market is. DraftKings shares were down around 20% at 5 p.m. Eastern in after-hours trading.
DraftKings will hold an analyst call at 8:30 a.m. Eastern Friday.
DraftKings leaning into ‘strong returns’
Robins said the data makes it clear that DraftKings should continue to invest in its prediction market product.
“Across our business, we follow the data and underwrite to strict payback periods, and we lean in when we see strong returns,” Robins said. “Our 2026 Predictions cohort is outperforming the two-year paybacks we targeted and is alread run-rating to approximately $350 million of annualized Adjusted Gross Profit.
“We are seeing retention and engagement of newly acquired Prediction customers in line with that of Sportsbook customers. Additionally, we are observing attractive take rates of approximately 11.1% on trades on DKeX across brokerage, exchange, and market making in September and October. We captured approximately two-thirds of that gross revenue, with third-party market makers capturing the rest.”
The predictions platform has provided “remarkable” results in just a few months, Robins said. Annualized consumer volume hit $10.1 billion in October, up almost 3 times from July. Annualized total volume, meanwhile, is up more than 5 times from July to $56.8 billion.
Combos, called parlays in sports betting, accounted for 27% of consumer volume in October. More than 70% of customers traded combos last month, Robins said, explaining that DKeX lists more than 3 times as many game-level markets as its nearest competitor.
Core business continues to grow
DraftKings saw sports betting handle grow 12% in the third quarter and could have been better without the 1.2 percentage point increase in net revenue margin to 6.4%. Revenue grew 36%.
Online casino, meanwhile, had a 76% increase in customers. Gross revenue rose 7% while net revenue was up 2%, reflecting the promotions issued to gain those customers.
Current trading is off to a good start as well. Paid customer days were up 24% in October with gross revenue up 12%.
