Draft Kings shares fell over 20% in after-market trading after the sports betting company slashed its 2026 earnings guidance by more than $500 million and redirected spending toward its prediction market business. The company reduced its adjusted EBITDA outlook to $175-$275 million for 2026, down from a prior range of $700-$900 million. Chief Executive Jason Robins acknowledged the prediction market offering is "best-in-class" but warned revenues would be outweighed by heavy marketing costs this year.
The move reflects broader industry pressure as investors shift focus to prediction markets, which are regulated as financial derivatives and face fewer restrictions than traditional gambling. Competitor Flutter also trimmed guidance, citing unfavorable sports results and a Brazil gambling ban. Meanwhile, Kalshi and Polymarket have secured major celebrity partnerships and raised significant capital, with Kalshi recently valuing at $40 billion.
Adding regulatory pressure, the Commodity Futures Trading Commission issued an advisory urging prediction market operators to end domestic geographic restrictions, potentially expanding their reach against companies like Draft Kings that currently do not offer sports event contracts in betting-permitted states.
Source: Financial Times Companies · Summarized by HeadlinesBriefing