- Price
- $19.31
- Fair value
- $39.00
- Discount
- 50.5%
- Uncertainty
- High
- LSEG rating
- 1.98
- Moat
- Narrow
- Next earnings
- 2026-11-06
- Next earnings is estimate
- Yes
- Company name
- DraftKings
- Sector
- Online sports betting & gaming
- About
- DraftKings runs online sports betting, online casino games (iGaming), daily fantasy sports and, since December 2025, a prediction market product called Predictions. Its mobile sports betting is live in 27 US states, Washington, D.C. and Puerto Rico, about 53% of the US population, and iGaming is live in 5 states. It also operates in Canadian provinces with about 51% of the Canadian population. DraftKings makes money from the share of bets that customers lose (the hold), after promotions, and it pays state taxes and fees to market access partners. In Q2 2026, it had 3.6 million monthly unique payers, and customers bet $13.1 billion on sports. Its largest costs are marketing, promotions, taxes and the technology to run its own betting platform.
- Thesis
- The market prices DraftKings at a discount because prediction markets such as Kalshi and Polymarket threaten its sports betting business. These platforms offer sports event contracts in many states under federal rules, without state licenses or state betting taxes, and they spend heavily on advertising. DraftKings launched its own Predictions product and spends on it, so profit falls: Q2 2026 revenue fell 5% to $1.44 billion and adjusted EBITDA fell to $115 million from $301 million. In October 2026, Jefferies estimated that Predictions spending in the second half of 2026 is about $100 million above the plan of $200 million to $300 million. Rival Fanatics plans to spend up to $1 billion on betting ads in 2027. For the gap to close, three things must be true. Courts or regulators must limit sports event contracts to licensed operators, as the Ninth Circuit did for Nevada on August 28, 2026, and a wider ruling must follow, possibly from the Supreme Court. DraftKings must meet its 2026 outlook of $6.5 billion to $6.9 billion of revenue and $700 million to $900 million of adjusted EBITDA. Its core business must keep about $1 billion of adjusted EBITDA while Predictions gains share. The first test is the Q3 2026 report, expected in early November 2026. The 2027 outlook in February 2027 and court decisions through mid-2027 come next. If regulators restrict prediction markets, or DraftKings wins share in them at a profit, the gap can close over the next four to six quarters. The main risk is that federal rules keep prediction markets open in every state, so that state-licensed betting loses its protection.
- Risks
- Prediction markets offer sports event contracts in many states without state licenses or state betting taxes. If federal rules let them operate everywhere, they can take customers and lower the value of DraftKings' state licenses. Courts disagree, and the Supreme Court was asked in September 2026 to decide.
Spending on Predictions, promotions and advertising lowers profit. Adjusted EBITDA fell 62% in Q2 2026, and Jefferies expects an adjusted EBITDA loss in Q3 2026. Rivals such as Fanatics and the prediction markets plan large advertising budgets for 2027.
Sports outcomes change results each quarter. Customer-friendly outcomes lowered revenue in Q2 2026, and Susquehanna flagged weak sports betting margins in October 2026.
States can raise betting taxes or add rules on gambling ads and responsible gaming. Quartz reported in September 2026 that the Massachusetts Gaming Commission is looking into how DraftKings used AI to target customers who lose money.
iGaming growth slowed. Jefferies said that iGaming grew 5.4% in Q2 2026, which can be the slowest pace in DraftKings' history.
- Balance sheet
- Cash: $984M
Debt: $1.9B
Net debt: $873M
Last debt due: 2028
DraftKings funds itself with two debts. At June 30, 2026, it had $1,265 million of zero-coupon convertible notes due March 15, 2028, and $592 million of a secured term loan. Cash excludes $395 million of cash reserved for users, which belongs to customers and matches part of the $840 million of liabilities to users. On August 25, 2026, DraftKings added a $700 million secured term loan due 2033 at SOFR plus 2.00%, and it plans to use most of it to buy back convertible notes. On the same day, a $750 million revolving credit facility due August 2031 replaced the $500 million facility. DraftKings had an operating loss in the first half of 2026, so interest cover does not apply. Its total equity was $569 million at June 30, 2026, after share buybacks and past losses.
As of 2026-06-30.
- Checkpoints
- Nov 6, 2026 (estimate): Q3 2026 results: Predictions spending and the 2026 outlook. Pending. Watch: A kept 2026 outlook of $700 million to $900 million of adjusted EBITDA and growing Predictions volume pass; a lower outlook or a larger Predictions loss fails.
Feb 2027 (estimate): Full-year 2026 results and 2027 outlook. Pending. Watch: A 2027 outlook with adjusted EBITDA near $1 billion or more passes; an outlook with more Predictions losses and lower profit fails.
Q2 2027 (estimate): Court and regulatory decisions on sports prediction markets. Pending. Watch: Rulings that let states require licenses for sports event contracts pass; a federal ruling that lets prediction markets offer sports contracts in every state fails.
- Recent events
- 2026-10-15: Jefferies kept its Buy rating and cut its 2026 adjusted EBITDA estimate by 15% to $577 million. It expects about $100 million more spending on Predictions in the second half of 2026 than the plan of $200 million to $300 million, and an adjusted EBITDA loss of $67 million in Q3 2026. It said that DraftKings is now the third-largest US prediction exchange by volume.
2026-10-05: Bank of America upgraded DraftKings to Buy and said that prediction markets can be an opportunity for sportsbooks. The stock rose about 5%.
2026-10-02: Fanatics said that it plans to spend up to $1 billion on betting ads in 2027. DraftKings and FanDuel's parent Flutter fell to new multiyear lows, as reports said that Kalshi seeks a valuation of about $40 billion.
2026-09-23: DraftKings' audit committee dismissed BDO as auditor, effective after the 2026 audit, and appointed Deloitte for 2027.
2026-08-28: The US Court of Appeals for the Ninth Circuit ruled that sports event contracts are sports bets and not swaps. The ruling lets Nevada treat sports prediction markets as unlicensed sportsbooks, and it rejected appeals by Kalshi and Crypto.com. DraftKings stock rose nearly 10%.
2026-08-25: DraftKings closed a $700 million senior secured term loan due 2033 at SOFR plus 2.00%, mainly to buy back part of its convertible notes due 2028. It also replaced its $500 million revolving credit facility with a $750 million facility due August 2031.
2026-08-06: DraftKings reported Q2 2026 results. Revenue was $1,443 million, down 5%, because of customer-friendly sports outcomes and more promotions for Sportsbook and Predictions. Sports betting volume rose 15% to $13.1 billion, and monthly unique payers rose 9% to 3.6 million. Adjusted EBITDA was $115 million against $301 million a year earlier, and the net loss was $68 million. DraftKings kept its 2026 outlook.
2026-06-09: DraftKings said that annualized consumer volume in Predictions grew 24% from April to May 2026, to $1.3 billion.