DraftKings Q2 Profitability Falls but Predictions Growth Outpaces Expectations

Profits at DraftKings fell sharply in the second quarter of 2026 as unfavorable sports results and higher customer-acquisition spending weighed on earnings. Still, management is increasingly bullish on a prediction market business that has grown much faster than expected.

During the earnings call, CEO Jason Robins said that over 600,000 customers have engaged with DraftKings Prediction so far this year. He added that the annualized total volume increased nearly fivefold from $2.3 billion in April to $11 billion in July.

Robins said that the pace of adoption has “far surpassed our expectations.” He added that the company expects further rapid growth as DraftKings improves its offerings and the NFL season kicks off.

While prediction markets dominated management’s discussion, DraftKings’ Adjusted EBITDA fell 62% year over year to $114.6 million in Q2, while the company swung to a $67.6 million net loss. Revenue declined 4.6% to $1.44 billion.

Management, however, is positioning the weaker profitability as partly the result of temporary sports outcomes and partly a consequence of leaning into customer acquisition as it expands its prediction market business nationwide.

DraftKings Expects Predictions Growth to Accelerate During NFL Season

DraftKings said annualized prediction market volume increased from $2.3 billion in April to $3.1 billion in May, $9.1 billion in June and $11 billion in July.

More than half of Predictions customers have already used combos, which the company introduced in May. Combos, which synonymous to parlays offered by sportsbooks, are approaching 20% of consumer volume, according to DraftKings.

Notably, on the day of the earnings, DraftKings’ in-house exchange, DKeX, filed to self-certify combo offerings. That would allow the company to avoid relying on third-party exchanges, such as Crypto.com, to offer those markets.

Robins expects the NFL season to provide another major growth catalyst.

In a CNBC interview, he said DraftKings expects “millions and millions of customers” to engage with its Predictions offering this fall. Robins added that he expects this NFL season to be “by far our biggest.” He also described customer-acquisition costs as “unbelievably efficient.”

The opportunity, according to Robins, resembles entering numerous new sportsbook jurisdictions simultaneously.

This is, like, half the country launching at once,” he said.

Predictions also allow DraftKings to be more efficient in advertising. As the product allows the company to reach consumers in states without online sports betting, such as California and Texas, DraftKings can leverage national advertising investments through partners such as ESPN and Amazon to reach them.

“It’s mostly the same dollars we’re spending, and we’re getting twice the audience for it,” Robins told CNBC.

That dynamic is already showing up in DraftKings’ acquisition figures.

Company-wide customer acquisition increased nearly 75% year over year during Q2. The company acquired roughly 30% more customers than planned and increased acquisition spending by about 10%, yet underlying customer acquisition costs still came in approximately 25% better than management expected.

DraftKings Says Prediction Markets Are Reaching Different Customers

DraftKings also pushed back against sportsbook cannibalization concerns, echoing Flutter’s second-quarter view.

The company said it continues to see only about 1% customer overlap between its sportsbook and “the largest prediction-market operator” in states with legal online sports betting.

Based on its internal analysis, DraftKings estimates that 80% to 90% of prediction market consumer volume in sportsbook states comes from professional betting syndicates and institutional traders. Robins said that volume “mostly would not have been on Sportsbook to begin with.” DraftKings has been public in its stance that it does not welcome sharp bettors.

He sharpened that distinction in the CNBC interview, criticizing what he described as a misleading industry narrative that prediction markets are simply “peer-to-peer.” Robins argued that retail customers are often trading against professional bettors, market makers and institutional firms, warning that misrepresenting those dynamics could damage trust in the industry.

The picture is different in states without legal online sports betting. Robins told analysts that DraftKings is seeing a customer profile there that more closely resembles its traditional sportsbook customers.

That distinction is central to DraftKings’ argument that Predictions represents an incremental market rather than a major cannibalization threat to its sportsbook.

DraftKings Plans $200M-$300M Predictions Investment

DraftKings expects to invest between $200 million and $300 million in Predictions in 2026. However, the $300 million upper end may not be a hard ceiling. Asked whether DraftKings could spend more if customer acquisition remains attractive during football season, Robins said the company would continue to follow the data.

DraftKings is also bringing more of the prediction market operation in-house. It launched DKeX in June, received Futures Commission Merchant approval in July and is already making markets on three exchanges (DKeX, Crypto.com, CME Group) at a profit.

Robins told analysts that the company plans to shift much of its major sports volume to its own exchange, which management expects will improve unit economics.

However, Robins acknowledged that regulatory uncertainty is keeping DraftKings from investing as aggressively as it would in a conventional sportsbook launch.

There are some regulatory questions that make the future and exactly what that’s going to look like not entirely certain. So we aren’t leaning in quite as hard as we would in, say, a new state launch at this point.”

Sports Outcomes, Acquisition Spending Weigh on Q2 Profitability

The investment push comes against a substantially weaker set of headline Q2 financial results. Sports revenue declined 10.6% year over year to $891.9 million, even as Sports Consumer Volume (handle) increased 14.5% to $13.14 billion. Sports net revenue margin fell to 6.8% from 8.7%.

Robins said customer-friendly sports results accounted for approximately $80 million of revenue headwind during the quarter. Increased customer acquisition accounted for the remainder of the difference between reported revenue and DraftKings’ normalized growth figure.

DraftKings said revenue would have increased 10% year over year after normalizing for sports outcomes and customer acquisition.

June was particularly unfavorable, with the company pointing to customer-friendly NBA and World Cup results. DraftKings said positive World Cup outcomes in July largely offset the tournament-related weakness from June.

The underlying volume trends have also remained strong. Sportsbook handle increased 11% in Q2, while Robins said post-World Cup July handle was up 20% year over year and momentum had continued into August.

That has management expecting a particularly strong football season as DraftKings attempts to grow both its traditional sportsbook and Predictions businesses simultaneously.

DraftKings Q2 Financial Snapshot

• Revenue: $1.44 billion, down 4.6% year over year
• Adjusted EBITDA: $114.6 million, down 61.9%
• Net income/loss: $67.6 million loss, compared with $157.9 million in net income in Q2 2025
• Sports revenue: $891.9 million, down 10.6%
• iGaming revenue: $461.9 million, up 7.5%
• Sports Consumer Volume: $13.14 billion, up 14.5%
• Monthly Unique Payers: 3.6 million, up 9%
• Average Revenue per MUP: $132, down 13%
• FY 2026 revenue guidance: $6.5 billion-$6.9 billion
• FY 2026 Adjusted EBITDA guidance: $700 million-$900 million