Platforms · Software · Providers · Markets
Predictions spending resets earnings expectations
DraftKings raised its planned 2026 investment in Predictions to $650 million to $700 million on 6 November 2026. The increase cuts its full-year Adjusted EBITDA outlook to $175 million to $275 million, from the earlier $700 million to $900 million range, even though the established business is forecast to deliver $875 million to $925 million.
Third-quarter revenue reached $1.33 billion, 16% higher year-on-year, while the Adjusted EBITDA loss widened to $316.9 million from $126.5 million. Predictions alone is expected to use another $175 million to $225 million in the fourth quarter. DraftKings expects 2026 net revenue from the unit to remain immaterial, as customer promotions offset most gross revenue.
DKeX keeps more trade economics in-house
DraftKings has disclosed how DKeX contributes to the investment case. Across September and October, revenue from brokerage, exchange operation and market making worked out to a gross take rate of approximately 11.1%. DraftKings retained about two-thirds of that gross revenue, with external market makers receiving the balance. Unlike a business that routes customers to a separate exchange, DraftKings operates the interface, DKeX and its own market maker, giving it revenue at several points in a trade.
More than 1.6 million customers had used Predictions since the start of 2026. At October's rate, customer trading volume would annualise to $10.1 billion, nearly three times July's pace. Total activity, including market-maker trades, would annualise to $56.8 billion. That distinction matters when assessing customer participation. The 2026 cohort was generating approximately $350 million in annualised Adjusted Gross Profit, with acquisition costs projected to take about 20 months to recover. These figures accompanied DraftKings' third-quarter update, as Finance Magnates reported.
- For 2027, Predictions revenue is forecast at $650 million to $750 million, alongside $250 million to $350 million of further Adjusted EBITDA investment.
- DraftKings expects positive free cash flow from Predictions in 2028, with group Adjusted EBITDA also improving that year.
- In a scenario where sports event contracts end in July 2028, the 2026 cohort is expected to repay acquisition costs before then. The 2027 cohort could be more than halfway to repayment by that point and recover costs within roughly four years without sports contracts.
What this changes for operators
Operators assessing a similar exchange-led model should distinguish customer trading from total volume that includes market makers. They should also check whether reporting separates revenue earned through brokerage, exchange operations and market making, and shows how promotions reduce the amount retained. The source figures do not detail the systems or reconciliation processes behind those measures.
DraftKings says its investment will shift as the regulatory position develops. Operators should test how a change to the availability of sports event contracts would flow through customer acquisition payback, revenue forecasts and spending plans. The company has not said that its forecast is fixed regardless of the regulatory outcome.
Before relying on the reported run rates, operations teams should establish how customer volume, market-maker activity and promotional costs are represented in their own reporting. They should also ask what reconciliations are needed between trade-level activity and revenue across the brokerage, exchange and market-making functions. The disclosed figures do not specify those procedures, so the treatment of each component remains an implementation question.
