DraftKings (DKNG) shares fell 25% in after-hours trading Thursday to $17.60 after the company reported third-quarter results and reduced its 2026 revenue outlook. The stock was down 20% in premarket trading Friday. The report also offered one of the clearest readings yet on what it costs a major sportsbook operator to build a predictions business from scratch.

DraftKings reported a third-quarter loss of 94 cents per share on revenue of $1.33 billion. FactSet analysts had expected a loss of 41 cents per share on revenue of $1.39 billion. Investing.com reported an adjusted loss of 53 cents per share, compared with an estimate of 36 cents. Revenue nevertheless increased 16% from a year earlier.

The company’s full-year 2026 revenue guidance is now $6.35 billion to $6.55 billion, with a midpoint of $6.45 billion, down from the previous outlook of $6.7 billion. Analysts had expected approximately $6.65 billion to $6.67 billion. DraftKings projects 2026 adjusted EBITDA of $175 million to $275 million.

DRAFTKINGS $DKNG Q3’26 EARNINGS HIGHLIGHTS 🔹 Revenue: $1.33B (Est. $1.4B) 🔴; +16% YoY 🔹 EPS: -$0.94 (Est. -$0.39) 🔴 🔹 Adj. EPS: -$0.53 Customers & Assets: 🔹 MUPs: 4.1M; +13% YoY FY26 Guide: 🔹 Revenue: $6.35B-$6.55B (Est. $6.67B) 🔴 🔹 Adj. EBITDA: $175M-$275M FY27… pic.twitter.com/BdVXlQdpk8 — Wall St Engine (@wallstengine) November 5, 2026

The update was also posted by Wall St Engine on X.

Predictions investment weighs on outlook

The lower guidance reflects heavier investment in DraftKings Predictions. Adjusted EBITDA expenses for the segment are expected to total $650 million to $700 million this year. DraftKings reported third-quarter adjusted EBITDA of negative $316.9 million, compared with negative $126.5 million a year earlier.

The company’s 2027 adjusted EBITDA outlook is $800 million to $1 billion, below analysts’ expectation of approximately $1.12 billion. CEO Jason Robins said DraftKings is now the clear number three predictions exchange by total volume, behind Kalshi and Polymarket. Both are dedicated predictions platforms rather than diversified sportsbooks, underscoring how new this competitive ground is for an operator of DraftKings’ size.

Robins expects predictions revenue to reach $700 million next year. He also said that predictions revenue would be “immaterial” in 2026 because promotions for new customers would offset most of it. New-customer sign-ups increased 13% year over year.

Robins said non-sports contracts, particularly crypto-linked contracts, have been a major growth driver. DraftKings operates the business in-house, writes its own contracts and owns the exchange. Flutter, the parent company of FanDuel, uses contracts from Crypto.com.

The regulatory status of sports event contracts remains uncertain. The Supreme Court has been asked to review a dispute concerning oversight of those contracts. Freedom Capital Markets analyst Nick McKay wrote that if sports contracts are prohibited, the sportsbook business would flourish again. Whether the Supreme Court agrees to hear the dispute is one of the key regulatory developments to watch, along with whether predictions revenue builds toward the $700 million Robins projects for next year.

Core businesses continue to grow

Net sportsbook revenue rose 36% from a year earlier, while iGaming revenue increased 7%. iGaming is available in five states, compared with 29 states for mobile sports betting, but it still accounted for 35% of quarterly revenue.

In his shareholder letter, Robins wrote, “We have never had more ways to win.” The stock had risen about 20% during the six weeks before the earnings report. Investing.com attributed that advance to favorable election results, particularly in Texas, and expectations of less regulatory pressure. The contrast between that core momentum and the predictions-driven losses framed the quarter’s central tension: a growing operator paying heavily for a foothold in a new market.

DraftKings’ after-hours price was near its 52-week low of $18.35. The company’s report was published by CoinCentral.