Key Points
- Revenues decreased by 5%, falling to $1.44bn due to an almost $80m headwind caused by bettor-favourable sport outcomes, resulting in sportsbook margins being reduced from 8.7% to 6.8%.
- DraftKings plans to invest between $200m and $300m into its Predictions platform this year, with its annualised trading volumes increasing from $2.3bn in April to $11bn in July.
- In contrast to the parent company of FanDuel Flutter reducing its forecast of adjusted EBITDA for the year by $210m, DraftKings retained its 2026 guidance of $6.5bn to $6.9bn in revenues.
DraftKings Posts $67.6m Q2 Loss as Winning Bettors and World Cup Costs Collide
DraftKings saw more money flow through its systems during Q2 2026 than ever before. Players placed wagers totalling $13.1bn via both DraftKings’ sportsbook and Predictions offerings from April to June, marking a year-over-year increase of 15%. DraftKings saw its customers join at 75% greater speed than during the corresponding period in 2025. This did not prevent the gambling platform from posting a $67.6m net loss, compared to the $157.9m net profit seen in Q2 2025.
Revenue for the quarter came in at $1.44bn, down 5% year-on-year and short of the roughly $1.55bn analysts had projected. The primary cause was not a loss of customers or a drop in wagering activity. Sport results simply went the bettors’ way, from the New York Knicks’ NBA championship run to a string of World Cup outcomes that favoured punters heavily. DraftKings has estimated that bettor-friendly outcomes created an approximately $80m revenue headwind in the quarter alone.
Volume Rose, Revenue Did Not Follow
Sportsbook handle climbing 15% while sportsbook revenue falls 10.6% points to one thing: margin compression. DraftKings’ net sportsbook revenue margin dropped to 6.8% in Q2, down from 8.7% in the same period last year. Sportsbook revenue came in at $891.9m despite sports consumer volume reaching $13.1bn. When popular teams win and favourites cover, the platform pays out more, and the percentage of wagers retained as revenue falls regardless of how much money flowed through.
The company witnessed an increase of 9% year-over-year in monthly unique payers to around 4.4 million. However, average revenue per payer declined by 13% to $132 due to the favourable results that benefited the bettors. The segment of iGaming provided some relief with a rise of 7.5% in its revenues to $461.9m, which constituted 32% of overall group revenues during the quarter.
Adjusted EBITDA declined from $300.6m to $114.6m, almost halved compared to last year. Operating loss amounted to $68.2m against an operating profit of $150.6m in Q2 2025. Marketing and sales expenses increased from $233.2m to $322.5m, mainly because of high marketing costs linked with the World Cup event and acquisition costs related to the Predictions platform launched in December 2025.
Predictions Platform Scales Faster Than Expected
Inside a difficult set of headline numbers sits a detail DraftKings executives returned to throughout the earnings call. Annualised trading volume on its Predictions platform rose from $2.3bn to $11bn between April and July, a near-fivefold increase in four months. More than 600,000 customers used Predictions in the first half of 2026, a pace CEO Jason Robins said “far surpassed” what the company had planned for.
Over half of those users engaged with Combos, a parlay-equivalent product within Predictions. Robins was blunt about its performance: “Combos has been an absolute smash.” DraftKings now offers more than 30 markets per MLB, NBA, and WNBA game through Predictions, including player and innings-level prop markets.
The platform’s infrastructure has developed quickly. DraftKings launched its own in-house exchange, DKeX, in June 2026, and received National Futures Association approval as a futures commission merchant in July. Those approvals allow the company to make its own markets and distribute them across external trading platforms, not only its own app. Robins said DraftKings is currently the only operator simultaneously running a brokerage, an exchange, and a market-making operation.
Robins also addressed the question of whether Predictions cannibalises the core sportsbook. “There is very minimal, if any, cannibalisation happening,” he said on the 7 August earnings call. The company’s data points to only around 1% customer overlap between its sportsbook and Kalshi, the largest prediction market operator, in states with regulated sports betting. Robins added that between 80% and 90% of sports prediction market volume in regulated sportsbook states originates from professional betting syndicates and institutional traders, customers the sportsbook would not have captured regardless.
In states without regulated sports betting, such as California and Texas, Predictions is drawing customers with a profile closely matching DraftKings’ sportsbook base in regulated markets. “When you start to see that broader awareness really take hold,” Robins said in reference to the NFL season ahead, “that’s when you’re going to see much, much faster customer acquisition come in.”
A $200m to $300m Commitment and a Steady Guidance Call
DraftKings has committed to spending an incremental $200m to $300m on its Predictions platform through the remainder of fiscal 2026, covering marketing, product development, and technology. The Super App is now live nationwide, combining sportsbook, iGaming, and Predictions in one platform. It gives DraftKings a sports product in 18 states where it cannot offer a regulated sportsbook, specifically through the Predictions vertical.
While it posted a quarterly loss, the firm kept its outlook for the year unchanged. Revenue is estimated between $6.5bn and $6.9bn, while adjusted EBITDA is estimated between $700m and $900m. According to CFO Alan Ellingson, the company is still on track to produce adjusted EBITDA of about $1bn this year, which will give it enough financial freedom to finance the development of Predictions. “Our core business continues to be on track to produce approximately $1bn of adjusted EBITDA this year, giving us the financial flexibility to invest in the significant opportunity we see in predictions.”
For the first half as a whole, revenue rose 5.8% to $3.09bn. Increased costs produced an H1 operating loss of $62.3m and a net loss of $46.5m, against a $124.1m net profit in the first half of 2025.
DraftKings Holds Its Line as Flutter Cuts
The divergence between DraftKings and FanDuel’s parent company, Flutter Entertainment, after Q2 is notable. Flutter cut its full-year 2026 adjusted EBITDA guidance by $210m to a $2.655bn midpoint and simultaneously announced that CEO Peter Jackson would step down, with Dan Taylor succeeding him on 1 October. FanDuel’s own sportsbook revenue dropped 15% to $1.039bn in Q2.
DraftKings’ decision to hold guidance unchanged, while its largest US rival trimmed targets and changed leadership, signals a degree of confidence in the second-half pipeline. The NFL season and the national Super App rollout are now the central tests of whether that confidence is warranted.
Expert Analysis
Analysts at Regulus Partners placed the Q2 results in a wider context. They noted that DraftKings and FanDuel remain closely matched in the US, with DraftKings holding a marginal edge in sports betting handle growth and FanDuel retaining a stronger iGaming position. The more pressing issue, Regulus argued, is where meaningful domestic growth comes from next. The sportsbook state legalisation pipeline is narrowing; iGaming remains legal in only five states, covering roughly 11% of the US population. Prediction markets attract attention, but Regulus described regulatory uncertainty as a persistent drag and questioned whether the category can deliver substantial long-term commercial returns at scale.
The DraftKings DKeX exchange is set to roll out into the big leagues ahead of the college football and NFL seasons, an effort that rests on the existing regulatory environment remaining constant. The Q2 loss is a result of the particular conjunction of poor sport results, increased promotion expenses, and a capital expenditure for the new product. How well these expenses translate into sustained growth is contingent on the NFL season start as well as the trajectory of the Predictions volume growth that shot up from April through July.
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