TLDR
- DraftKings posted Q1 revenue of $1.65 billion, up 17% year-over-year, and beat adjusted EBITDA forecasts with a record $168 million
- The company launched a market-making arm earlier this year that has already turned a profit, described as one of the fastest divisions to reach profitability
- Consumer volume on DraftKings Predictions topped $1 billion in April, with annualized volume exceeding $2.3 billion
- Kalshi raised $1 billion in Series F funding at a $22 billion valuation, surpassing the market caps of both Flutter and DraftKings
- DraftKings reaffirmed full-year 2026 revenue guidance of $6.5 billion to $6.9 billion and plans to invest $200 million to $300 million on predictions this year
DraftKings delivered a first-quarter earnings beat on Friday, reporting revenue growth and record adjusted EBITDA as the company pushes deeper into the prediction markets space.
The company reported $1.65 billion in revenue for the quarter, a 17% increase from the same period last year. The results were in line with Wall Street expectations.
Adjusted EBITDA came in at $168 million, topping analyst forecasts and setting a new company record for a first quarter. CEO Jason Robins struck an upbeat tone on the earnings call, a contrast from the cautious guidance DraftKings gave back in February.
A key focus of the call was the company’s growing prediction markets business. DraftKings launched a market-making division earlier this year, and Robins said it has already produced a positive return.
He called it one of the “fastest to profitability” segments in the company’s history.
Market makers provide liquidity on prediction platforms by ensuring trades are matched with counterparties. Only a handful of major players currently operate in the space, including Susquehanna International Group and Jump Trading.
DraftKings Eyes Leadership in Sports Predictions
DraftKings also plans to roll out a proprietary prediction market exchange through Railbird Exchange LLC, which it acquired last October for $84.8 million. The company intends to offer combination trades on the platform.
Robins said the company aims to become a leader in sports predictions by the end of the year. He told analysts that DraftKings should “theoretically have one of the top two or three market makers in the world” given its modeling capabilities.
Consumer volume on DraftKings Predictions passed $1 billion in April. The annualized total of volume traded exceeded $2.3 billion, with monthly increases of 38% and 43% in those categories.
The company said predictions have had only a slight impact on sportsbook handle so far, resulting in a negligible hit to revenue.
DraftKings reaffirmed its full-year 2026 revenue guidance of $6.5 billion to $6.9 billion and adjusted EBITDA guidance of $700 million to $900 million. CFO Alan Ellingson said for the first time the annual guidance includes prediction market investments, which the company expects to total $200 million to $300 million this year.
Competition Heats Up Across the Industry
The prediction markets landscape has become crowded. Overall trading volume across the industry approached $30 billion last month. Kalshi and Polymarket combined for nearly $24 billion in April volume, with Kalshi holding a 62% market share.
Roughly 72% of Kalshi’s volume came from sports-event contracts, according to Bernstein data.
Robinhood generated $147 million in “other transaction revenue” in the first quarter, a 320% year-over-year increase. That category is primarily made up of event contract trading fees.
Rival Flutter said on its own earnings call Wednesday that FanDuel plans to launch a market-making platform later this year. FanDuel has already begun a trial of market-making services on a third-party prediction platform.
On Thursday, Kalshi announced a $1 billion Series F funding round that valued the company at $22 billion. That valuation exceeds both Flutter and DraftKings, which had market caps of $17.7 billion and $12.9 billion on Friday.
DraftKings shares rose more than 7% to a session high of $27.21 before pulling back. By noon ET, the stock traded at $25.92, up 2.78%.
The stock is still down nearly 25% over the past 12 months. In February, shares tumbled 20% after the company issued subdued guidance.
DraftKings flagged several risk factors tied to predictions in an SEC filing, including its ability to develop new offerings and compete in the emerging market. FanDuel, Fanatics, and DraftKings have not released specific prediction market revenue projections for 2026.
