DraftKings reports 16% revenue growth as prediction costs deepen losses

DraftKings reported another quarter of revenue growth for the three months ended September 30, 2026, but its latest results also highlighted the cost of expansion. Revenue increased 16% year on year to $1.329 billion. The net loss widened, operating cash flow weakened over the first nine months and management reduced its full-year financial guidance.

The November 5 results put the company's Predictions business at the centre of its outlook. DraftKings is investing to establish a position in event-based markets while relying on its sportsbook and online gaming operations to support the expansion.

DraftKings delivers higher third-quarter revenue

Revenue reached $1.329 billion, compared with $1.144 billion in the same period of 2025. DraftKings attributed the increase mainly to customer engagement and a stronger sportsbook net revenue margin.

The company recorded a net loss of $468.7 million, compared with $256.8 million a year earlier. Its operating loss increased to $493.1 million from $271.9 million. Adjusted EBITDA, a non-GAAP measure, was negative $316.9 million compared with a negative $126.5 million in the third quarter of 2025. Revenue growth therefore did not translate into improved quarterly profitability.

The results demonstrate the difference between expanding commercial activity and achieving stronger earnings. Although DraftKings attracted more customers and generated additional revenue, its rising operating costs and investment commitments continued to weigh on the bottom line.

Sports activity supports the rebound

Sports Consumer Volume increased 21.9% to approximately $13.9 billion. Sports Revenue reached $783.6 million, up 31.5%, while Sports Net Revenue Margin improved to 5.6% from 5.2%.

DraftKings defines Sports Revenue as revenue from online and retail sportsbooks as well as prediction markets. Sports Consumer Volume includes settled wagers and trades across its Sportsbook and Predictions offerings, so neither measure should be read as sportsbook-only data.

Monthly Unique Payers increased 13% to approximately 4.1 million. Average Revenue per Monthly Unique Payer reached $109, up about 3%. iGaming revenue grew more slowly, increasing 2.1% to $460.9 million.

Sportsbook results can vary with event outcomes. In the second quarter of 2026, total revenue declined 4.6% despite 14.5% growth in Sports Consumer Volume. DraftKings attributed the revenue decline mainly to customer-friendly sports outcomes and promotional investment, illustrating why wagering volume alone does not determine revenue.

The third-quarter improvement therefore reflects more than an increase in customer activity. The stronger sports revenue margin also contributed to the company's performance and helped support the overall revenue recovery.

Higher spending widens quarterly losses

Sales and marketing expenses rose 68% to $605.7 million from $360.4 million a year earlier. Product and technology costs also increased. The published figures do not establish that the entire increase in marketing expenses was attributable to Predictions, but they show that costs rose considerably faster than revenue.

This spending pattern is important when evaluating DraftKings' expansion strategy. The company is developing additional products while maintaining its established customer acquisition activities. These commitments can increase the cost of operations before newer products reach a level of commercial maturity that supports stronger earnings.

Net cash provided by operating activities for the first nine months of 2026 was $63.0 million, compared with $342.4 million in the same period of 2025. Cash and cash equivalents totalled approximately $1.10 billion at September 30.

Total assets stood at $4.61 billion and total liabilities at $4.43 billion. Stockholders' equity was approximately $179.6 million, down from $631.5 million at the end of 2025. These figures do not, on their own, establish an immediate liquidity problem, but they are relevant to an assessment of the company's capital structure and capacity to fund further investment.

Investors can review the company's quarterly financial statements through the DraftKings investor relations page and the SEC filings database. DraftKings is listed on Nasdaq under the ticker DKNG.

Predictions becomes central to the strategy

DraftKings launched Predictions in December 2025 and said more than 1.6 million customers had engaged with the product during 2026 by the time it reported its third-quarter results.

The DraftKings Predictions launch announcement on the company's official website described the product as an expansion into event-based contracts. The offering gives eligible customers access to markets linked to real-world outcomes and represents a strategic development beyond conventional sportsbook and online casino operations.

Chief executive Jason Robins has presented customer adoption as an important milestone for the business. Chief financial officer Alan Ellingson has also described the established operations as a source of financial support for the company's expansion plans.

Management expects an adjusted EBITDA investment of $650 million to $700 million in Predictions during 2026. It also expects the product's revenue to remain immaterial this year because customer promotions are likely to offset most of the gross revenue generated. The company expects adjusted EBITDA investment of $175 million to $225 million in the fourth quarter.

The $650 million to $700 million figure is an expected investment measured in adjusted EBITDA terms, not a revenue forecast. DraftKings expects its core business to generate adjusted EBITDA of $875 million to $925 million in 2026, while consolidated adjusted EBITDA guidance has been reduced to $175 million to $275 million.

The company cut its 2026 revenue forecast to $6.35 billion to $6.55 billion, from $6.5 billion to $6.9 billion. Its adjusted EBITDA outlook was reduced from $700 million to $900 million. DraftKings said the revision primarily reflected increased investment in Predictions, further investment in iGaming and the impact of modestly customer-friendly sports outcomes on the core business.

Predictions operates within a developing regulatory environment. The Commodity Futures Trading Commission publishes guidance on prediction markets and event contracts and regulatory developments may affect how particular products can be offered. This is another factor investors may monitor alongside customer growth and commercial performance.

2027 targets set a demanding test

DraftKings expects 2027 revenue of $7.35 billion to $7.75 billion and adjusted EBITDA of $800 million to $1 billion. Management forecasts $650 million to $750 million in Predictions revenue, alongside a further adjusted EBITDA investment of $250 million to $350 million.

The core business is expected to generate revenue of $6.7 billion to $7 billion and adjusted EBITDA of $1.15 billion to $1.25 billion. The forecast indicates that established operations are expected to remain the financial foundation while Predictions continues to receive substantial resources.

Meeting these targets will require DraftKings to convert early customer engagement into repeat activity, manage promotional costs and develop revenue in line with management's estimates. The figures are forward-looking expectations, not guaranteed outcomes.

DraftKings reported mobile sports betting operations in 27 U.S. states, Washington, D.C. and Puerto Rico, covering approximately 53% of the U.S. population. Its iGaming products were available in five states, representing about 11% of the population. The company also reported Sportsbook and iGaming operations in Canadian provinces representing approximately 51% of the country's population.

Further expansion depends on local laws, licensing and market conditions. These regulatory considerations remain relevant to the company's longer-term revenue opportunities, particularly as it develops products that operate under different regulatory frameworks.

Conclusion

DraftKings enters the final months of 2026 with two distinct financial signals. Its customer base is growing and quarterly revenue has advanced at a double-digit rate. However, the larger net loss, weaker operating cash flow and sharp reduction in adjusted EBITDA guidance show that this growth is accompanied by a substantial investment burden.

Predictions is central to the company's longer-term plan, but customer adoption alone will not establish whether the strategy succeeds. The key test is whether DraftKings can turn engagement into recurring revenue while reducing promotional support and improving the economics of customer acquisition. Its 2027 forecast gives investors a measurable benchmark, but it also sets a demanding standard for a recently launched product.

The established sportsbook and iGaming operations remain important because they are expected to fund much of the expansion. If those businesses maintain their performance and Predictions develops in line with management's projections, DraftKings could broaden its revenue base. If costs remain elevated or customer economics improve more slowly than expected, profitability could take longer to recover.

The third-quarter report is therefore not simply a story of higher revenue. It is a test of capital allocation and execution. Future results should show whether the investment is beginning to deliver the contribution that DraftKings has forecast.

FAQs

How much revenue did DraftKings report in Q3 2026?
DraftKings reported $1.329 billion in third-quarter revenue, representing an increase of approximately 16% compared with $1.144 billion in the same quarter of 2025.

What was DraftKings' net loss in the third quarter?
The company reported a net loss of $468.7 million, compared with a net loss of $256.8 million in the third quarter of 2025.

What contributed to DraftKings' revenue growth?
Higher customer engagement and an improved Sports Net Revenue Margin supported the increase. Sports Consumer Volume also grew by approximately 21.9% year on year.

How many monthly paying customers did DraftKings report?
DraftKings reported approximately 4.1 million Monthly Unique Payers in Q3 2026, representing an increase of approximately 13%.

How much did DraftKings spend on sales and marketing?
Sales and marketing expenses reached approximately $605.7 million in the third quarter, compared with $360.4 million a year earlier.

What is DraftKings Predictions?
DraftKings Predictions is an event-based trading product launched in December 2025. It allows eligible customers to participate in markets connected to specified real-world outcomes.

How much does DraftKings expect to invest in Predictions during 2026?
Management expects adjusted EBITDA investment of between $650 million and $700 million during 2026. The company also expects Predictions revenue to remain immaterial for the year.

What is DraftKings' revenue forecast for 2027?
DraftKings expects full-year 2027 revenue between $7.35 billion and $7.75 billion, according to its latest financial guidance.

Where is DraftKings' online sportsbook available?
The company's reported mobile sportsbook footprint covers 27 U.S. states, Washington, D.C. and Puerto Rico. It also operates in Canadian provinces representing approximately 51% of the country's population.

What are the main financial challenges facing DraftKings?
The main challenges include higher operating expenses, substantial Predictions investment, reduced 2026 earnings guidance and the need to turn customer acquisition into sustainable revenue growth.