DraftKings Raises Predictions Investment to $700M in 2026

DraftKings (DKNG) was downgraded by three firms (UBS, JPMorgan, Stifel) citing regulatory uncertainty and weak EBITDA forecasts. Q3 revenue rose 16% to $1.33B, with guidance for 2027 revenue at $7.35B-$7.75B. Management calls it a 'pivotal moment.' Wall Street saw broad tech sell-offs due to AI regulation fears and strong jobs data.

DraftKings and FanDuel are closely competing for the top spot in U.S. online sports betting. DraftKings reported $13.9B in sports consumer volume and $783.6M in revenue for Q3, while Flutter (FanDuel's parent) reported $12B in handle and $1B in revenue. Analysts suggest DraftKings may have a slight edge. Both companies plan to increase spending on prediction markets and marketing.

DraftKings plans to invest $650M–$700M in 2026 and $250M–$350M in 2027 to expand its prediction markets, expecting $650M–$750M in 2027 revenue. The company aims to attract and retain customers through promotions, with profitability dependent on post-promotion trading activity. Analysts note risks, including customer overlap and regulatory uncertainty.

DraftKings (DKNG) shares fell 12% in a week after raising its 2026 Predictions budget to $700M and cutting adjusted EBITDA guidance to $175M-$275M. Four firms downgraded the stock, with JPMorgan finding it 'difficult to recommend.' Q3 revenue was $1.33B, below expectations. Rivals Flutter (FLUT) and Robinhood (HOOD) are also targeting prediction markets.

Berenberg downgraded DraftKings (DKNG) to Hold with a $20 price target, citing heavy spending on prediction markets and uncertain regulatory outlook. Q3 revenue was $1.33B, below consensus, with adjusted EBITDA loss of $317M. 2026 EBITDA guidance cut by 72% to $225M. Multiple brokerages downgraded DKNG after results.

DraftKings (DKNG) was downgraded by JPMorgan, UBS, and Stifel after its Q3 results and reduced 2026 outlook, with analysts citing uncertainty over prediction market profitability. The company expects $900M-$1.05B in adjusted EBITDA losses through 2027. Price targets were cut to $21-$22. DraftKings also lowered its 2026 core revenue and adjusted EBITDA guidance.