DraftKings shares fall 25% as prediction betting unit loses money

DraftKings shares lose a quarter of their value after predictions bet bleeds cash

Jason Robins called it a pivotal moment. Wall Street called it a 26% share price collapse.

DraftKings reported Q3 revenue of $1.33 billion on Friday, up 16% year-on-year, with monthly unique payers climbing 13% to 4.1 million. By any conventional reading of a sportsbook, those are strong numbers. The market didn't read them conventionally. By noon in New York, DraftKings was trading at $17.60, touching a fresh 12-month low, after after-hours selling the night before had already taken 22% off the price.

The number that did the damage wasn't in revenue. It was in adjusted EBITDA: a loss of $317 million for the quarter, against a loss of $126 million in the same period a year earlier. DraftKings has told investors it will spend at least $650 million on its predictions business this year. The company now projects 2026 full-year revenue of $6.35 to $6.55 billion, down from earlier guidance of $6.5 to $6.9 billion. For 2027, Robins is guiding to $7.35 to $7.75 billion in revenue and adjusted EBITDA of $800 million to $1 billion.

That 2027 EBITDA number is the bet. Everything in Friday's sell-off is a disagreement about whether Robins gets there.

The bull case is straightforward: 1.6 million customers have engaged with DraftKings' predictions offering so far this year, event contract trading across the industry crossed $160 billion in October alone, and the company believes it is building infrastructure that will generate returns at scale. Robins is spending to own a category before the category is fully legal, fully regulated, or fully understood by the institutional investors who just sold his stock.

The bear case is also straightforward: the CFTC preemption order that was supposed to clear the federal path for prediction markets is now being defied by state attorneys general, challenged in federal courts, and complicated by criminal proceedings in Utah against Kalshi's founders. The legal architecture Robins built his predictions investment around is not settled. It may not settle in his favour.

This is where I part from the consensus read on today's selloff. The market is pricing DraftKings as though the predictions loss is primarily an earnings problem. I think it's primarily a timing problem being treated as a valuation problem. The investment in predictions is real, the losses are real, and the 2027 recovery is genuinely uncertain — but the specific mechanism of that uncertainty is the regulatory clock, not the product. DraftKings has 1.6 million users who showed up despite the legal fog. That doesn't happen if the product is wrong.

Flutter, for context, fell more than 6% after its own earnings miss earlier in the week and has lost more than 60% over the past year. The whole sector is being repriced. What makes DraftKings' situation distinct is that Robins made the bet explicitly and publicly, staked his guidance on it, and is now personally associated with the outcome in a way that is both a liability in a down week and an asset if the 2027 numbers arrive.