Key Highlights
- First-quarter revenue reached $1.65 billion for DraftKings, marking a 17% year-over-year increase, while adjusted EBITDA hit a Q1 record of $168 million, surpassing analyst projections
- A newly established market-making operation launched earlier this year has achieved profitability, ranking among the company’s quickest divisions to generate positive returns
- DraftKings Predictions saw consumer trading volume surpass $1 billion in April alone, with annualized volumes climbing past $2.3 billion
- Competitor Kalshi secured $1 billion in Series F funding at a $22 billion valuation, exceeding the market capitalizations of industry leaders Flutter and DraftKings
- Full-year 2026 revenue projections of $6.5 billion to $6.9 billion remain unchanged, with the company allocating $200 million to $300 million for prediction market investments
DraftKings exceeded first-quarter earnings expectations on Friday, showcasing robust revenue expansion and unprecedented adjusted EBITDA figures as the organization intensifies its commitment to the prediction markets sector.
The gaming company announced first-quarter revenue of $1.65 billion, representing a 17% gain compared to the previous year’s corresponding period. These figures aligned with Wall Street’s projections.
Adjusted EBITDA reached $168 million, surpassing analyst expectations and establishing a new benchmark for any first quarter in company history. During the earnings call, CEO Jason Robins adopted an optimistic stance, markedly different from the conservative outlook DraftKings communicated in February.
Much of the discussion centered on the company’s expanding prediction markets operations. Following the introduction of a market-making division earlier this year, Robins reported that the unit has already generated positive financial returns.
He characterized it as among the company’s most rapid divisions to achieve profitability throughout its history.
Market-making entities supply liquidity to prediction platforms by facilitating trade execution and matching counterparties. Currently, only a select group of major firms participate in this arena, including Susquehanna International Group and Jump Trading.
DraftKings Pursues Dominance in Sports Prediction Trading
The company also intends to launch its own prediction market exchange via Railbird Exchange LLC, which it purchased last October for $84.8 million. This platform will feature combination trading capabilities.
Robins expressed the company’s ambition to establish itself as a sports predictions leader before year-end. He informed analysts that DraftKings possesses the potential to operate “theoretically have one of the top two or three market makers in the world” based on its advanced modeling infrastructure.
Trading volume from consumers on DraftKings Predictions exceeded $1 billion during April. Annualized trading volume surpassed $2.3 billion, with month-over-month growth rates of 38% and 43% in these respective metrics.
According to company statements, prediction markets have minimally affected sportsbook handle thus far, creating only a marginal impact on overall revenue.
The company maintained its full-year 2026 revenue guidance between $6.5 billion and $6.9 billion, along with adjusted EBITDA projections of $700 million to $900 million. CFO Alan Ellingson noted that annual guidance now incorporates prediction market investments for the first time, which are anticipated to range from $200 million to $300 million throughout the year.
Industry Competition Intensifies Across Prediction Markets
The prediction markets sector has grown increasingly competitive. Industry-wide trading volume approached $30 billion last month. Kalshi and Polymarket collectively accounted for nearly $24 billion in April trading volume, with Kalshi commanding a 62% market share.
Approximately 72% of Kalshi’s volume originated from sports-event contracts, according to Bernstein data.
Robinhood reported $147 million in “other transaction revenue” during the first quarter, reflecting a 320% year-over-year surge. This revenue category consists predominantly of event contract trading fees.
Competitor Flutter announced during its Wednesday earnings call that FanDuel plans to introduce a market-making platform later this year. FanDuel has already initiated a pilot program for market-making services on a third-party prediction platform.
On Thursday, Kalshi unveiled a $1 billion Series F funding round that assigned the company a $22 billion valuation. This valuation surpasses both Flutter and DraftKings, which held market capitalizations of $17.7 billion and $12.9 billion respectively on Friday.
DraftKings stock climbed more than 7% to an intraday peak of $27.21 before retreating. By midday Eastern Time, shares traded at $25.92, representing a 2.78% gain.
Despite Friday’s advance, the stock remains down approximately 25% over the trailing twelve months. In February, shares plunged 20% following the company’s cautious guidance announcement.
In a recent SEC filing, DraftKings identified several risk factors associated with predictions, including its capacity to develop innovative offerings and maintain competitiveness in this nascent market. FanDuel, Fanatics, and DraftKings have not disclosed specific prediction market revenue targets for 2026.
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