Key Highlights
- First-quarter revenue reached $1.65 billion for DraftKings, marking a 17% jump from the prior year, while adjusted EBITDA hit an all-time Q1 high of $168 million
- A newly established market-making operation has achieved profitability in record time, becoming one of the company’s quickest divisions to generate positive returns
- Trading volume on DraftKings Predictions surpassed $1 billion during April alone, with yearly projections exceeding $2.3 billion
- Prediction platform Kalshi secured $1 billion through Series F financing at a $22 billion valuation, now worth more than Flutter and DraftKings combined market values
- Annual revenue projections remain unchanged at $6.5 billion to $6.9 billion for 2026, with planned prediction market investments ranging from $200 million to $300 million
DraftKings exceeded Wall Street’s first-quarter projections on Friday, showcasing strong revenue expansion and record-breaking profitability metrics while accelerating its entry into prediction markets.
The sports betting operator generated $1.65 billion during the three-month period, representing a 17% year-over-year climb. The figure aligned with analyst consensus estimates.
Adjusted EBITDA totaled $168 million, surpassing market predictions and establishing a new benchmark for any first quarter in company history. During the earnings discussion, CEO Jason Robins adopted an optimistic stance, diverging from the more conservative outlook the company communicated in February.
The earnings call placed considerable emphasis on DraftKings’ expanding prediction markets operations. Following the launch of its market-making division at the start of the year, Robins revealed the unit has already generated positive financial returns.
He characterized it as among the quickest ventures to achieve profitability throughout the company’s operational history.
Market-making entities supply liquidity to prediction platforms by facilitating trade execution and matching counterparties. The space currently features only a limited number of significant participants, such as Susquehanna International Group and Jump Trading.
Sports Predictions Leadership Target Set by DraftKings
The company also intends to introduce its own prediction market exchange via Railbird Exchange LLC, an entity acquired last October in an $84.8 million transaction. The platform will feature combination trading options.
Robins stated DraftKings is targeting a leadership position in sports predictions before year-end. He indicated to analysts that the company should “theoretically have one of the top two or three market makers in the world” based on its advanced modeling infrastructure.
Trading volume for DraftKings Predictions crossed the $1 billion threshold in April. Annualized volume projections exceeded $2.3 billion, with sequential monthly growth rates of 38% and 43% in respective metrics.
According to company statements, prediction markets have produced minimal impact on traditional sportsbook handle to date, creating only a marginal revenue effect.
DraftKings maintained its 2026 annual revenue projections between $6.5 billion and $6.9 billion, alongside adjusted EBITDA guidance spanning $700 million to $900 million. CFO Alan Ellingson noted this marks the first instance where yearly forecasts incorporate prediction market expenditures, anticipated to reach $200 million to $300 million throughout the current year.
Industry Competition Intensifies Rapidly
The prediction markets sector has grown increasingly competitive. Industry-wide trading volume approached $30 billion during the previous month. Kalshi and Polymarket collectively accounted for approximately $24 billion in April volume, with Kalshi commanding 62% market share.
Sports-event contracts represented roughly 72% of Kalshi’s total volume, according to Bernstein data.
Robinhood reported $147 million in “other transaction revenue” for the first quarter, reflecting a 320% year-over-year surge. Event contract trading fees constitute the primary component of this revenue category.
Competitor Flutter disclosed during its Wednesday earnings call that FanDuel intends to introduce a market-making platform before year-end. FanDuel has already initiated pilot testing of market-making capabilities on an external prediction platform.
Kalshi announced Thursday it had completed a $1 billion Series F investment round, establishing a company valuation of $22 billion. This figure surpasses the combined market capitalizations of both Flutter and DraftKings, which stood at $17.7 billion and $12.9 billion respectively on Friday.
DraftKings stock climbed over 7% to an intraday peak of $27.21 before retreating. By midday Eastern Time, shares traded at $25.92, representing a 2.78% gain.
The equity remains down approximately 25% over the trailing twelve months. Following subdued guidance issued in February, shares plummeted 20% in a single session.
DraftKings disclosed multiple risk considerations related to predictions in regulatory filings with the SEC, including uncertainties surrounding new product development and competitive positioning within this emerging market segment. FanDuel, Fanatics, and DraftKings have not published specific prediction market revenue forecasts for 2026.
