DraftKings makes clear its focus on prediction markets expansion
DraftKings stock saw a steep decline despite posting strong numbers in Q4 2025 as the operator doubles down on prediction markets. Here’s what the company is saying, and why it’s having such an impact on its near-term numbers.
US-based operator DraftKings is a key player in the country’s rapidly growing and evolving gambling scene, especially when it comes to sports betting. DraftKings has no shortage of players wagering, but the company has consistently posted losses year-after-year since going public in 2020.
2025 was the first year DraftKings reported a net profit, but the company still faced a decline in its stock valuation, and the reason may be that prediction markets have become such a priority for DraftKings. It’s another example of how the operator appears to be focused on future profits rather than short-term financial gains.
DraftKings bets on prediction markets, expects lower 2026 guidance
Prediction markets have taken the gambling industry by storm, especially because they currently face fewer restrictions in jurisdictions that have limitations on traditional betting activity. DraftKings was one of the biggest operators to get into prediction markets space from the start, and the company expects to invest even more in the vertical in 2026.
Taking into account the further need for expansion, DraftKings projected 2026 revenue of somewhere between $6.5 billion and $6.9 billion, with an adjusted EBITDA of between $700 million and $900 million. This fell substantially short of the $7.3 billion revenue and $998 million EBITDA predicted by analysts prior to the year, leading to the company’s stock experiencing a decline.
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DraftKings is serious about emerging as a key player in prediction markets, as the company’s CEO made clear its intention to be the long-term leader in the space and the operator expects to earn billions in revenue from the space in the long run. The operator has started heavily investing in tech, customer acquisition, and general capabilities around the space to better ensure it can offer the best possible service to players.
That investment isn’t a small one, but it hasn’t affected the DraftKings fantasy sportsbook’s performance as of yet, as the operator posted a $1.989 billion profit in Q4 2025. That represents a 43% year-on-year rise from the same period in 2024.
The company fell short in the adjusted earnings per share (EPS), posting $0.36 vs. the expected $0.39. Despite a profitable end to 2025, missing this metric and projecting a softer guidance for 2026 cost DraftKings in its current stock pricing, as the operator’s stock dropped by approximately 15%.
DraftKings is betting everything on prediction markets while apparently expecting prediction markets to overtake sports betting. The emerging vertical isn’t profitable yet, and it’s unclear how long it’ll take the operator to get a return on this massive investment. While DraftKings is optimistic, analysts and investors are less certain.
The lower guidance for 2026 has decreased analysts’ expectations, and investors are reacting accordingly. DraftKings finally posting a profit is a positive thing for the operator and for the state of online betting in the US, but until prediction markets become more stable, investors will likely stay wary of any company investing so deeply into it, and the financials will continue reflecting that.
Feature image credit: DraftKings
Khizar Mundia has been playing video games for as long as he can recall. Things have come a long way since the many days he spent playing the original NES, though. He now covers a variety of competitive games and esports, as well as the world of streaming, ranging from Twitch to Kick. If it’s of interest to gamers, it’s of interest to Khizar.
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