DraftKings hikes prediction-market investment to $700M as stock falls 26% on profit miss
DraftKings reported third-quarter revenue growth of 16% on November 9, missing analyst estimates. The company attributed the shortfall to heavy spending on its prediction markets business, which also dragged down 2026 profit guidance. DraftKings now expects 2026 adjusted EBITDA of $175 million. The company raised its 2026 investment in predictions to between $650 million and $700 million. Its DKeX platform reached an 11.1% gross take rate. DraftKings stock fell more than 26% on the news.
DraftKings' 26% plunge turns prediction markets from a growth narrative into a balance-sheet threat that rivals now track as a warning signal. The $800 million to $1 billion adjusted EBITDA guidance for 2027 includes only $250 million to $350 million from event contracts, so the core sportsbook still carries the load. An analyst cut the 12-month target price from $34 to $26, a 23.5% reduction, signaling that institutional patience is thinning.
FanDuel Predicts is burning comparable cash with minimal US adjusted EBITDA against its own revenue target, so neither leader has proven the model pays back. Every quarterly loss narrows the window to reach scale before a CFTC swaps rule or Supreme Court ruling reshapes the field. The first platform to show sustainable unit economics wins data partnerships and regulatory air cover; the other risks becoming a case study in overspend.
DraftKings joins Robinhood's event-contracts revenue surge as the second major retail platform to make prediction markets central to its growth narrative, though both remain dependent on partner infrastructure and regulatory timing.