DraftKings Inc.

What they do

DraftKings operates online and retail sports betting (Sportsbook), online casino (iGaming), daily fantasy sports, digital lottery courier, and prediction markets. Revenue is predominantly from Sportsbook and iGaming, which together accounted for 93% of 2025 revenue. The company is live with mobile sports betting in 27 states, Washington D.C., and Puerto Rico, and iGaming in 5 states.

Revenue drivers

• Sportsbook — Core product; generated $53.6 billion in handle in 2025 with a net revenue margin of 7.1%. Revenue growth driven by customer acquisition, engagement, and higher net revenue margin.
• iGaming — Second primary product; combined with Sportsbook accounted for 93% of 2025 revenue. Available in 5 states representing 11% of the U.S. population.
• Predictions — New offering launched December 2025; management says it is growing faster than anticipated and contributing to MUP growth. Included in Sports Consumer Volume.

Recent performance

For Q2 2026, revenue was $1,443 million, down 5% from $1,513 million in Q2 2025, driven by customer-friendly sport outcomes and promotional reinvestment. MUPs grew 9% to 3.6 million, but ARPMUP fell 13% to $132. Full-year 2025 revenue was $6.05 billion with net income of $3.7 million, a turnaround from a $507.3 million loss in 2024. Adjusted EBITDA for 2025 was $619.9 million, up from $181.3 million in 2024. Operating cash flow for 2025 was $662.9 million.

Strategy

Management priorities are to invest in product offerings, launch in new jurisdictions, achieve predictable state-level unit economics, and expand product lines. They are investing in the 'Super App' and Predictions, which is now live nationwide. The company continues to target profitability improvements through efficient customer acquisition, retention, and higher net revenue margin. They are also expanding into Canada, with Sportsbook and iGaming live in provinces representing about 51% of the Canadian population.

Risks

• Competition — Significant competition in global entertainment and gaming could attract users away from DraftKings' offerings.
• Consumer spending — Reductions in discretionary consumer spending could adversely affect business and results.
• Sport outcome variability — Win rates and hold rates depend on sport outcomes, which are not controlled by the company and can cause revenue volatility.
• Regulatory and licensing — Obtaining and maintaining gaming licenses is critical; regulatory changes could impact operations.

Outlook

Management maintains fiscal year 2026 guidance for revenue of $6.5 billion to $6.9 billion and Adjusted EBITDA of $700 million to $900 million. The core business is expected to generate approximately $1 billion of Adjusted EBITDA this year. Management expresses confidence in winning the Predictions category during the upcoming NFL season.