DraftKings ready for prediction rivals after mixed Q2 earnings

On a balmy morning in Boston’s Back Bay neighbourhood, DraftKings CEO Jason Robins appeared on CNBC’s Squawk Box talk show at a momentous period for the US sports wagering and predictions industry.

Before a vast streaming audience, Robins was asked about the mounting challenges from Kalshi and Polymarket, two nascent operators that are garnering valuations north of $20 billion. DraftKings is several weeks removed from the rollout of DKeX, the company’s proprietary prediction market exchange. The launch is part of a transition where DraftKings has integrated its predictions segment into its broader sports offerings.

Unlike the two aforementioned apps, DraftKings also operates a traditional online sports betting platform. Kalshi, the putative market leader in predictions, has recorded $39.7 billion in annualised trading volume thus far in 2026. In response to a question from CNBC’s Joe Kernan on if the companies have capitalised on a regulatory loophole, Robins responded that DraftKings welcomes the competition.

Robins then launched a tactical war of words. The DraftKings executive accused the companies of perpetuating a myth that he says could inflict  “long-term harm to the trust of the industry”. Specifically, Robins is miffed on perceived notions that the companies have no incentive to “see people win or lose”.

He went on to suggest that the claims are somewhat of a misnomer considering that recreational customers often serve as counterparties to powerful institutional market makers, armed with sophisticated tools on quantitative analysis.

“Some of the companies out there are spinning narratives that just aren’t true,” Robins told CNBC.

As of writing, Kalshi CEO Tarek Mansour did not respond to Robins’ comments via X. Both executives were appointed to the US Commodity Futures Trading Commission’s Innovation Advisory Committee earlier this year.

All in on predictions

Approximately an hour after the CNBC appearance, Robins addressed Wall Street analysts on DraftKings’ second-quarter earnings call. While DraftKings still lags behind Kalshi in predictions, the company had sports revenue of $1.99 billion on the quarter, a spike of almost 6% from the same period in 2025. When DraftKings released quarterly earnings on Thursday evening, the company consolidated results from online sportsbook, retail sportsbook and prediction markets revenue into one segment.

DraftKings did not release a separate breakout for prediction-related revenue, but noted that approximately 600,000 of its customers have engaged with the predictions platform since the beginning of the year. Robins is eagerly anticipating the upcoming football season for what he sees as a fertile customer acquisition period.

DraftKings concluded the three-month period ended 30 June 2026 with 3.6 million average monthly unique players, a 9.1% increase from the year-ago quarter. The increase, however, is largely attributed to a one-time bump from the 2026 FIFA World Cup. Ironically, Kalshi offers an event contract on whether the metric will top 4 million during the fiscal year. As of Noon ET on Friday, the option traded at 64% (a $100 trade would pay $137).

Earnings results

DraftKings’ second-quarter revenue decreased by $69.3 million to $1.44 billion, a decline the company attributed to customer-friendly sports results and increased promotional reinvestment. When asked if he anticipates higher promotional intensity for the upcoming football season, Robins replied that DraftKings has the flexibility to increase spending if necessary.

Earlier this week, Flutter management unveiled plans to invest an additional $270 million into its FanDuel US business in the latter half of 2026. While Flutter downwardly revised its guidance for full year 2026, DraftKings’ core business remains on track to produce annualised adjusted EBITDA of $1 billion, according to CFO Alan Ellingson.

“We remain focused on improving the efficiency of our cost structure while continuing to invest behind the opportunities that we believe will create the most long-term value,” he said. For the quarter, DraftKings reported adjusted diluted earnings per share of $0.09, missing analysts’ consensus estimates of $0.22.

Investors downplayed the miss, focusing instead on near-term optimism related to predictions expansion. DraftKings closed on Friday at $24.03 a share, up 8% on the day. Flutter, by comparison, fell approximately 9% on Wednesday after CEO Peter Jackson announced his departure. The disparity may indicate FanDuel’s reticence to go all-in with predictions.

Flutter, the FanDuel parent, made just $6 million from its predictions segment in the second quarter. According to Susquehanna analyst Joe Stauff, FanDuel is about 9-12 months behind DraftKings in establishing a predictions market offering. Flutter has not decided on whether to launch its own market-making exchange.

Citizens analyst Jordan Bender rated DraftKings as “market outperform” while maintaining a $36 price target. Bender’s rating is based on a blend of 15.5x on Citizen’s 2027 EBITDA and free cash flow estimates. Truist Securities analyst Barry Jonas reiterated a buy rating with a $29 price target.

Both DraftKings and Flutter are down more than 20% year-to-date amid heightened competition in sports products. Robins, however, appears undeterred. Ahead of NFL season, DraftKings will update the company’s “super app”, he said, with new offerings planned in predictions.

“We are on offence, the core business is firing,” Robins said.

Matt Rybaltowski

Matt is primarily responsible for long-form feature coverage on complex sports betting scandals. He also provides coverage on finance, M&A and other technological developments.