Weighed down by the swift expansion of prediction markets early this year, DraftKings issued conservative financial projections in February for fiscal-year 2026.
On Friday, during the company’s first-quarter earnings call, CEO Jason Robins seemed to maintain a much more optimistic perspective. The rise of Kalshi and Polymarket, along with the entrance of online brokers like Robinhood, has placed substantial strain on conventional sports betting equities. However DraftKings, a leading US sportsbook, may possess several unused tools poised for action.
Months after the launch of DraftKings Predictions, Robins noted on Friday that he is encouraged by the firm’s new market-making abilities, following a rapid research phase. During the discussion with Wall Street analysts, Robins revealed that DraftKings initiated a market-making unit earlier this year, a division that has already produced a positive profit for the organization. The growth aligns with the forthcoming release of DraftKings’ own prediction market exchange, where the firm intends to offer a broad array of combination trades.
“Combined, these actions will speed up innovation, enhance the customer experience and bolster our financials,” Robins stated.
An in-depth examination of market-making
Given the infancy of prediction markets, only a few prominent market makers exist across the sector, most notably Susquehanna International Group and Jump Trading. A market maker serves as a significant liquidity supplier for a regulated prediction market by guaranteeing that the other side of most trades is matched by a counterpart.
Independently, DraftKings intends to launch an in-house predictions exchange via its wholly-owned subsidiary Railbird Exchange LLC, a business it purchased last October for total consideration of $84.8 million. DraftKings has gained an advantage over arch rival Flutter, which indicated on its earnings call on Wednesday that it plans to launch a market-making platform at FanDuel later this year. On the call, Flutter announced that FanDuel began a trial last month of market-making services on a major, third-party prediction market platform.
Robins, meanwhile, described the market-making division as being one of the “fastest to profitability” in company history, adding that it has a significant opportunity to expand it at scale. By leveraging its market-making capabilities together with the proprietary exchange, DraftKings has aimed to become a leader in the sports predictions category by the end of the year.
“We should theoretically have one of the top two or three market makers globally, arguably the best, given our modelling capabilities,” Robins stated on the call.
A saturated landscape
Last month, total trading volume across prediction markets neared $30 billion, with Kalshi seizing the top position from Polymarket. According to Bernstein data, the two companies combined for monthly volume of nearly $24 billion in April, with Kalshi claiming a market share of 62%. Approximately 72% of Kalshi’s volume originated from sports-event contracts, Bernstein found.
Robinhood also generated $147 million in a segment known as “other transaction revenue” in the first quarter, posting a massive year-over-year improvement of 320%. The category mainly consists of trading fees from event contracts. On Friday’s call, DraftKings did not provide any revenue projections this year from prediction markets. FanDuel and Fanatics have also not disclosed estimates on prediction market revenue for 2026.
But in a Form 10-Q filing with the US Securities and Exchange Commission, DraftKings identified several risk factors linked to prediction markets, including the company’s capacity to “develop and market new offerings” along with its agility in effectively competing in the nascent industry.
On Thursday, Kalshi announced that it raised $1 billion in a Series F funding round that valued the company at $22 billion. The soaring valuation surpasses those of Flutter and DraftKings, which had market capitalizations on Friday of $17.7 billion and $12.9 billion, respectively.
Additional key points from DraftKings’ Q1 results
– DraftKings’ metric known as “monthly unique payers” (MUPs) dipped slightly to 4.2 million average customers in the first quarter, down from 4.3 million in the same period last year. However when excluding Jackpocket, DraftKings’ lottery division, the metric on monthly unique players rose by 2% year-over-year to 3.9 million.
– Another metric with the abbreviation “ARPMUPS” climbed to $131, a significant increase from the year-ago quarter. The abbreviation stands for “average revenue per monthly unique player”. DraftKings reported average revenue of $108 per monthly unique player in the same period in 2025. Excluding DraftKings’ lottery vertical, the figure rose 15% to $141, the company said in a presentation.
– In April, consumer volume on DraftKings Predictions surpassed $1 billion as its annualized total of volume traded exceeded $2.3 billion. The gains represent monthly increases of 38% and 43% in the respective categories. Predictions, as a whole, have only had a slight impact on sportsbook industry handle, DraftKings wrote in a letter to shareholders, resulting in a negligible effect on revenue.
– While Robins fielded a question on the closure of several product lines at FanDuel, he was not asked about Amy Howe’s departure. Howe, the former CEO of FanDuel, parted ways with the company on Wednesday after a five-year tenure. Both Flutter and DraftKings have experienced double-digit stock declines in 2026 amid investor concern on the heightened predictions competition.
Share movements
DraftKings generated $1.65 billion in revenue during the first quarter, an increase of 17% from the year-ago quarter. While the results aligned with analysts’ expectations, the company surpassed forecasts with adjusted EBITDA of $168 million, a new record for the quarter.
DraftKings also reaffirmed FY 2026 revenue guidance of $6.5 billion-$6.9 billion, along with adjusted EBITDA of $700 million-$900 million, said CFO Alan Ellingson. For the first time, DraftKings has included prediction market investments into its annual guidance, he added. DraftKings plans to invest about $200 million to $300 million on predictions this year.
DraftKings rose by more than 7% to a session-high of $27.21 per share, before trimming some of the gains in late-morning trade. At noon ET, DraftKings traded at $25.92, up 2.78%. By comparison, DraftKings fell sharply in February when the company introduced subdued full-year guidance for 2026. On 12 February, DraftKings dropped 20% in an after-hours session to $20 a share, falling to its lowest level in two years.
Despite Friday’s gains, DraftKings is still down nearly 25% over the last 12 months. When DraftKings reported first-quarter results last May, the company rose modestly to $37 a share following the earnings call.
In February 2025, DraftKings’ shares jumped 12% to $53 on the day after the Super Bowl. Analysts attributed the one-day surge to record Super Bowl handle and the Philadelphia Eagles’ win over the Kansas City Chiefs, a sportsbook-friendly outcome. A week later, DraftKings fell below $50 a share, a level which remains its 15-month peak.
Less than six months after DraftKings launched predictions near Christmas, Robins still believes the category is in its first inning.
“Our roadmap is clear, our execution is real and we intend to establish a leadership position in sports predictions by year-end,” Robins predicts.