TLDR
- DraftKings keeps about $7.30 in gross revenue for every $100 consumers trade on its exchange.
- The company plans to spend up to $1.05 billion on Predictions across 2026 and 2027.
- Marketing payback for 2027 customers is 18 months, or 41 months if sports contracts end in July 2028.
- A former lottery CFO says the first half of 2027 will test customer value.
- DraftKings posted a $317 million adjusted EBITDA loss in the third quarter.
DraftKings is collecting about $7.30 in gross revenue for every $100 that consumers trade on its prediction markets exchange, according to its November 5 earnings presentation. The figure gives an early look at how the company plans to earn back the money it is spending on the business.
The company has budgeted $650 million to $700 million in adjusted EBITDA for its Predictions product in 2026. It expects to spend another $250 million to $350 million in 2027.
How DraftKings Makes Money on Each Trade
During September and October, the company’s DKeX exchange earned an 11.1% gross take rate on consumer trading volume. DraftKings kept 65.6% of that through exchange fees, brokerage fees and market-making.
That works out to roughly $7.30 per $100 traded before costs. Promotions and operating expenses reduce the amount the company actually keeps.
DraftKings estimated $570 million in seasonally annualized gross revenue from its 2026 customer group. After promotions, net revenue fell to $470 million, with adjusted gross profit estimated at $350 million.
October annualized trading volume reached $56.8 billion. Market makers made up $46.7 billion of that total, while consumers traded $10.1 billion, based on October activity multiplied by 12.
More than 1.6 million customers have used Predictions so far this year. The company says revenue from the product will be immaterial in 2026 because new-customer promotions offset most of the gross revenue.
The Payback Clock
DraftKings expects to recover the marketing cost of its 2026 Predictions customers in about 20 months. For customers acquired in 2027, it projects 18 months.
These estimates cover acquisition marketing payback only, based on cumulative adjusted gross profit. They do not mark the point when Predictions as a whole turns a profit.
The company also modeled a scenario where sports event contracts end in July 2028. Under that case, payback for the 2027 group stretches to 41 months, though the scenario is not a confirmed regulatory outcome.
Ivan Soloviov, a former CFO of a European national lottery operator, told Gambling Insider the real test comes in the first half of 2027. He said investors should watch net revenue per active Predictions customer once welcome promotions stop.
“The 2026 spend is mostly a customer purchase, not a running cost,” Soloviov said. He added that if activity falls away when the promotional money ends, the 2027 guidance would not be credible.
DraftKings has forecast $650 million to $750 million in Predictions revenue for 2027. The company has said new Predictions customers show retention and engagement similar to its sportsbook customers.
Soloviov also raised the question of overlap with the sportsbook. If existing bettors move spending to Predictions, part of the growth would be revenue shifting between products. DraftKings says overlap is small and that Predictions mainly reaches states without legal sports betting.
The core business is funding the expansion. DraftKings guides 2026 core adjusted EBITDA at $875 million to $925 million, leaving consolidated adjusted EBITDA at $175 million to $275 million after Predictions spending.
Third-quarter net revenue rose 36% year over year as handle grew 12%. Still, the company posted an adjusted EBITDA loss of about $317 million for the quarter, compared with a $126 million loss a year earlier.
For 2027, DraftKings expects core adjusted EBITDA of $1.15 billion to $1.25 billion and consolidated adjusted EBITDA of $800 million to $1 billion. Asked about retention, promotions and overlap, a company spokesperson said DraftKings had “nothing further to add beyond the disclosures in our third-quarter earnings materials.”
