DraftKings takes on massive investment to capture prediction markets, drops over 21% after earnings.

BlockBeats news, November 6 - Sports betting platform DraftKings reported its third-quarter financial results, with revenue up 16% year-over-year to $1.329 billion, but net loss widened from $257 million in the same period last year to $469 million, with a loss of 94 cents per share, higher than the market expectation of 41 cents.

Additionally, the company lowered its 2026 adjusted EBITDA forecast from the previous $700 million to $900 million range to $175 million to $275 million, with the midpoint guidance dropping from $800 million to $225 million, a decrease of approximately 71.9%. The full-year revenue guidance was also cut from $6.5 billion to $6.9 billion to $6.35 billion to $6.55 billion.

The guidance cut mainly stems from the company's investment in its prediction market business. DraftKings expects that in 2026, this business will impact adjusted EBITDA by $650 million to $700 million, with fourth-quarter standalone investment expected to reach $175 million to $225 million. As new user promotions will offset most of the gross gaming revenue, the company expects the revenue contribution from the prediction market this year to remain limited.

However, traditional businesses are still growing. Third-quarter sports betting revenue grew 31.5% year-over-year to $784 million, while iGaming revenue increased 2.1% to $461 million. The company expects that in 2026, adjusted EBITDA from traditional businesses can still reach $875 million to $925 million.

For 2027, the company expects prediction market revenue to reach $650 million to $750 million, while continuing to invest $250 million to $350 million for business expansion, with full-year adjusted EBITDA guidance of $800 million to $1 billion.

Following the earnings release, the DKNG perpetual contract on Hyperliquid fell from approximately $23.46 before the earnings to as low as $17.16, a maximum decline of about 26.9%; it then rebounded to $18.34, but was still down about 21.8% from pre-earnings levels. The past 24-hour trading volume was approximately $2.77 million, with nominal open interest valued at approximately $940,000.