Encumbered by the rapid proliferation of prediction markets at the start of this year, DraftKings provided cautious financial guidance in February for fiscal-year 2026.
On Friday, during the company’s first-quarter earnings call, CEO Jason Robins appeared to maintain a considerably rosier outlook. The emergence of Kalshi and Polymarket, combined with the entry of online brokers such as Robinhood, has exerted significant pressure on traditional sports betting stocks. But DraftKings, one of the largest US sportsbooks, could be equipped with several untapped weapons ready for deployment.
Months after the launch of DraftKings Predictions, Robins indicated on Friday that he is encouraged by the company’s new market-making capabilities, following a swift research period. During the call with Wall Street analysts, Robins disclosed that DraftKings launched a market-making arm earlier this year, a segment that has already generated a positive return for the company. The expansion dovetails with the impending rollout of DraftKings’ proprietary prediction market exchange, where the company plans to offer a wide variety of combination trades.
“Together, these moves will accelerate innovation, improve the customer experience and strengthen our economics,” Robins said.
A deep dive into market-making
Given the nascence of prediction markets, there are only a handful of prominent market makers across the industry, most notably Susquehanna International Group and Jump Trading. A market maker acts as a major liquidity provider for a regulated prediction market by ensuring that the other side of most trades are matched by a counterparty.
Separately, DraftKings plans to roll out an in-house predictions exchange through its wholly-owned subsidiary Railbird Exchange LLC, a company it acquired last October for total considerations of $84.8 million. DraftKings has established a leg up on arch rival Flutter, which indicated on its earnings call pn Wednesday that it plans to roll out a market-making platform at FanDuel later this year. On the call, Flutter announced that FanDuel began a trial last month of market-making services on a major, third-party prediction market platform.
Robins, meanwhile, described the market-making division as being one of the “fastest to profitability” in company history, adding that it has a significant opportunity to expand it at scale. In utilising its market-making capabilities in conjunction with the proprietary exchange, DraftKings has set its sights on becoming a leader in the sports predictions category by the end of the year.
“We should theoretically have one of the top two or three market makers in the world, arguably the best, given our modelling capabilities,” Robins said on the call.
A crowded field
Last month, overall trading volume across prediction markets approached $30 billion, with Kalshi wrestling the top spot from Polymarket. According to Bernstein data, the two companies combined for monthly volume of nearly $24 billion in April, with Kalshi commanding a market share of 62%. Approximately 72% of Kalshi’s volume came from sports-event contracts, Bernstein found.
Robinhood also generated $147 million in a segment known as “other transaction revenue” in the first quarter, producing a whopping year-over-year improvement of 320%. The category primarily consists of trading fees from event contracts. On Friday’s call, DraftKings did not specify any revenue projections this year from prediction markets. FanDuel and Fanatics have also not released estimates on prediction market revenue for 2026.
But in a Form 10-Q filing with the US Securities and Exchange Commission, DraftKings identified several risk factors associated with prediction markets, including the company’s ability to “develop and market new offerings” along with its nimbleness in effectively competing in the emerging industry.
On Thursday, Kalshi announced that it raised $1 billion in a Series F funding round that valued the company at $22 billion. The soaring valuations tops that of Flutter and DraftKings, which had market capitalisations on Friday of $17.7 billion and $12.9 billion, respectively.
Other highlights from DraftKings’ Q1 earnings
– DraftKings’ metric known as “monthly unique payers” (MUPs) fell slightly to 4.2 million average customers in the first quarter, down from 4.3 million in the same period last year. But when excluding Jackpocket, DraftKings’ lottery division, the metric on monthly unique players increased by 2% year-over-year to 3.9 million.
– Another metric with the abbreviation “ARPMUPS” jumped to $131, a considerable increase from the year-ago quarter. The abbreviation stands for “average revenue per monthly unique player”. DraftKings reported average revenue of $108 per monthly unique player in the same period in 2025. Excluding DraftKings’ lottery vertical, the figure rose 15% to $141, the company said in a presentation.
– In April, consumer volume on DraftKings Predictions eclipsed $1 billion as its annualised total of volume traded exceeded $2.3 billion. The gains represent monthly increases of 38% and 43% in the respective categories. Predictions, as a whole, have only had a slight impact on sportsbook industry handle, DraftKings wrote in a letter to shareholders, resulting in a negligible impact to revenue.
– While Robins fielded a question on the closure of several product lines at FanDuel, he was not asked about Amy Howe’s departure. Howe, the former CEO of FanDuel, severed ties with the company on Wednesday after a five-year stint. Both Flutter and DraftKings have experienced double-digit stock declines in 2026 amid investor concern on the heightened predictions competition.
Stock moves
DraftKings generated $1.65 billion in revenue during the first quarter, an increase of 17% from the year-ago quarter. While the results were in line with analysts’ expectations, the company beat forecasts with adjusted EBITDA of $168 million, a new record for the quarter.
DraftKings also reaffirmed FY 2026 revenue guidance of $6.5 billion-$6.9 billion, along with adjusted EBITDA of $700 million-$900 million, said CFO Alan Ellingson. For the first time, DraftKings has included prediction market investments into its annual guidance, he added. DraftKings plans to invest about $200 million to $300 million on predictions this year.
DraftKings rose by more than 7% to a session-high of $27.21 per share, before paring some of the gains in late-morning trade. At noon ET, DraftKings traded at $25.92, up 2.78%. By comparison, DraftKings fell sharply in February when the company introduced subdued full-year guidance for 2026. On 12 February, DraftKings tumbled 20% in an after-hours session to $20 a share, falling to its lowest level in two years.
Despite Friday’s gains, DraftKings is still down nearly 25% over the last 12 months. When DraftKings reported first-quarter results last May, the company rose modestly to $37 a share following the earnings call.
In February 2025, DraftKings’ shares jumped 12% to $53 on the day after the Super Bowl. Analysts attributed the one-day surge to record Super Bowl handle and the Philadelphia Eagles’ win over the Kansas City Chiefs, a sportsbook-friendly outcome. A week later, DraftKings dipped below $50 a share, a level which remains its 15-month peak.
Less than six months after DraftKings launched predictions near Christmas, Robins still believes the category is in its first inning.
“Our roadmap is clear, our execution is real and we intend to establish a leadership position in sports predictions by year-end,” Robins predicts.
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.
Original article: https://igamingbusiness.com/sports-betting/draftkings-tops-q1-estimates-may-2026-predictions/
