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- DraftKings management revealed that its newly launched “Predictions” market is seeing explosive early growth, scaling from an annualized trading volume of $2.3 billion in April to $11 billion by July, though executives cautioned that the product’s regulatory future remains “not entirely certain.”
- Despite the rapid adoption of its prediction product, DraftKings faced broader Q2 2026 headwinds, reporting a 4.6% year-over-year revenue drop driven by unusually bettor-friendly outcomes (such as the Knicks championship and World Cup group stage) and a 30% surge in customer acquisition costs.
DraftKings is seeing fast early growth from its new Predictions market, with trading volume reaching an annualized $11 billion in July, even as the sportsbook operator reported second-quarter revenue pressure and said the product’s regulatory future is “not entirely certain.”
That combination is central to the latest investor debate around the company. A Yahoo Finance analysis published Oct. 14 said DraftKings has grown revenue strongly over the longer term, but its stock is down sharply over the past year and the company remains unprofitable.
Over the past 12 months, DraftKings generated $6.2 billion in revenue, up from $5.4 billion a year earlier. But the company’s shares fell 40% in the 12 months through Oct. 13, compared with about 20% for the S&P 500, according to the report.
Predictions is growing quickly, but questions remain
Management said more than 600,000 customers had used Predictions by the second-quarter earnings call. The company also said the product is attracting many new users in states without a regulated sportsbook.
Trading volume growth has been steep. DraftKings said Predictions was running at an annualized $2.3 billion in April and reached $11 billion by July.
Management said revenue per Predictions customer will be lower than for a traditional sportsbook customer, but gross profit per customer could become similar over time because Predictions carries higher margins.
At the same time, executives cautioned that the business still faces regulatory uncertainty. On the earnings call, management described the future of Predictions as “not entirely certain.”
Core business results still frame the investor case
The source analysis noted that DraftKings’ revenue has increased at an average annual rate of 28.0% over the past three years, versus 5.9% for the broader S&P 500. Still, profitability remains a weak point: DraftKings posted a -2.9% operating margin over the last 12 months, compared with 18.5% for S&P 500 companies.
Second-quarter 2026 results added more pressure. Revenue fell 4.6% from a year earlier, which management attributed to bettors winning more often than usual and to higher customer acquisition spending.
According to management, bettor-friendly outcomes reduced revenue by about $80 million, driven mainly by the Knicks championship and the World Cup group stage. The company also said it acquired roughly 30% more customers than planned as interest in the NBA Finals and the World Cup surged.
Excluding bettor wins and extra customer spending, management said revenue grew 10% year over year in the quarter. DraftKings also maintained its 2026 adjusted EBITDA forecast of $700 million to $900 million, and said that outlook already includes spending on Predictions.
For gambling industry watchers, the key question now is whether Predictions becomes a meaningful, durable growth channel for DraftKings, or whether regulatory uncertainty limits how far the product can expand.
Source: As reported by Trefis Team.
