DraftKings CEO Jason Robins defended the company's plans to invest approximately $1 billion in prediction markets over two years, arguing the business can deliver acceptable returns even if the U.S. Supreme Court forces sports event contracts off the market. DraftKings' financial models assume a Supreme Court decision around mid-2028, though the timing and outcome remain uncertain.
Shares plunged more than 20% in after-hours trading after the third-quarter report, as investors weighed the cost of the aggressive expansion. DraftKings raised its prediction-market spending plan to $650–700 million this year and another $250–350 million in 2027 — a combined projected adjusted EBITDA investment of $900 million to $1.05 billion, up from the $200–300 million previously planned for this year.
Under its base case, the company expects to recover acquisition costs for prediction-market customers acquired in 2027 within roughly 18 months. If the Supreme Court strikes down sports event contracts on the assumed July 2028 timeline, that payback period extends to about 41 months — longer than DraftKings' typical three-year target for its core business, but still acceptable, Robins said. The Supreme Court has not agreed to hear prediction market cases; New Jersey, alongside amicus briefs from the NFL, the American Gaming Association and tribal interests, petitioned the justices in September, and Kalshi has until Dec. 7 to respond.
More than 1.6 million customers have engaged with Predictions year-to-date, and annualized trading volume reached $56.8 billion in October, more than five times July levels. Of that, $10.1 billion was consumer volume and $46.7 billion market-maker volume. Nearly 20% of Predictions customers have traded non-sports contracts, and cryptocurrency markets have approached 10% of consumer trading volume in recent weeks. DraftKings plans to migrate crypto trading onto its DKeX exchange within a month.
Third-quarter revenue rose 16% to $1.33 billion, but the net loss widened to $468.7 million from $256.8 million a year earlier, and adjusted EBITDA loss grew to $316.9 million from $126.5 million. DraftKings cut its 2026 revenue guidance to $6.35–6.55 billion from $6.5–6.9 billion and adjusted EBITDA guidance to $175–275 million from $700–900 million. Robins attributed roughly 60% of the reduction in the core business outlook ($875–925 million versus about $1 billion) to customer-friendly sports outcomes, with the remainder due to increased iGaming customer acquisition.
