DraftKings Sees Slower 2026 Growth Despite $10 Billion Prediction Market Opportunity

Legalized sports betting triggered one of the fastest state-by-state commercial expansions in modern consumer tech. At least until prediction markets went over the heads of state regulators straight to the Commodity Futures Trading Commission (CFTC).

But if the first chapter of online sports betting was defined by regulatory arbitrage and marketing spend, the next may hinge on platform depth and the ability to transform entertainment into tradable probability.

DraftKings is betting, quite literally, that it can lead that transition by redefining not just how people bet on sports, but how they engage with uncertainty itself. The betting operator on Friday (Feb. 13) announced its fourth-quarter 2025 and full-year earnings, posting quarterly revenue of about $1.99 billion, roughly a 43% year-over-year increase, and beating some earnings expectations.

“Our core business is strong as we enter 2026,” said Jason Robins, DraftKings CEO and co-founder. “We also see a massive, incremental opportunity in DraftKings Predictions. We plan to deploy growth capital to build the best customer experience in Predictions, and acquire millions of customers. We have the playbook to execute and win.”

But investors focused less on the backward-looking performance and more on management’s forward guidance of fiscal year 2026 revenue in the range of roughly $6.5 billion to $6.9 billion, which pointed to slower growth than analysts had anticipated, sending the company’s share price down around 12% as of reporting as investors scrutinized the capital intensity required to lead the “Predictions” category.

Read also: Kalshi Overtakes DraftKings and FanDuel in Download Race

Expansion of the Betting Perimeter

If DraftKings’ core business is entering a maturity phase, its leadership clearly believes the next frontier lies in reframing sports engagement through a trading lens.

Executives described Predictions, an emerging product vertical that allows users to trade event-based contracts, as “the most exciting new growth opportunity” since sports betting legalization in 2018. The company sees this not merely as a feature but as a new category potentially representing a $10 billion annual gross revenue opportunity over time.

A key technological catalyst for the Predictions vertical is the integration of Railbird Technologies, which is expected to occur near the middle of 2026.

PYMNTS reported in December that there has been an influx of U.S.-accessible prediction market platforms because prediction markets, unlike sports betting and other gambling products, are now regulated at the federal level by the CFTC, not at the state level by gambling commissions, although state regulators across over a dozen states are challenging the legality of prediction markets within their borders, with some achieving a degree of success.

Beyond the regulatory elephant, a key investor concern is also whether Predictions could erode the sportsbook business by diverting customer spending. DraftKings said it has not observed meaningful cannibalization to date, noting minimal impact on handle and primarily among lower-margin users.

Central to DraftKings’ thesis is that owning more of its technology stack translates directly into economic advantage. The company highlights its internal modeling capabilities, trading infrastructure, and machine-learning expertise as differentiators enabling real-time pricing and risk management at scale.

Since 2022, DraftKings says it has added nearly 6 million customers while growing revenue by roughly $4 billion and adjusted EBITDA by more than $1 billion. Unique customers engaging with the platform have climbed steadily over the past several years, reaching double-digit millions by late 2025, according to internal metrics shown in the earnings presentation.

See also: Prediction Markets Turn Uncertainty Into a Business Model

Volatility Remains Embedded in the Model

Viewed through a wider lens, DraftKings’ trajectory resembles that of other consumer platforms that began with a single regulatory opening and expanded into ecosystems. What started as daily fantasy sports has layered into sportsbook, iGaming, lottery offerings, and now Predictions — five distinct verticals designed to reinforce one another.

Like streaming services or FinTech apps before it, DraftKings is increasingly monetizing user behavior across an integrated stack rather than within discrete products. Management noted that operating leverage from prior-year investments in customer lifecycle management and marketing technology has begun to yield significant dividends.

But even as DraftKings approaches profitability, elements of its revenue base remain inherently variable. Sports outcomes can materially affect quarterly results, with the company estimating that a one-standard-deviation swing could move revenue by roughly $150 million in either direction.