DraftKings Losses Up as Prediction Market Battle Bites

Gambling giant DraftKings has announced its Q3 financial results, with mixed fortunes attributed to its developing prediction exchange.

The company reported total revenue of $1.3 billion for the three months ending Sept. 30. That was an increase of 16% – or $185 million – year over year.

However, net losses jumped, causing alarm on the markets where DraftKings shares dropped 22% after the report.

DraftKings is investing heavily in its Predictions platform as traditional sports betting is threatened. The company said its adjusted earnings forecast for 2026 was now $175–$275 million, far lower than previously predicted.

Shares Down, Earnings Forecast Cut

Despite posting Q3 revenue growth of 16% year-over-year, DraftKings investors will be spooked by the EBITDA losses. Net income loss was up to $468.7 million, attributed DraftKings says to an investment boost to its Predictions exchange.

The tone of the forecast was generally upbeat, however, with DraftKings CEO Jason Robins highlighting the company’s “pivotal moment”, especially regarding its prediction market site. He added that DraftKings Predictions has brought in over 1.6 million customers, something he says would set the company up “for an exceptional 2027.”

The company has been ploughing millions into its prediction markets as it attempts to catch up with the industry leaders, Kalshi and Polymarket. Unlike those two, DraftKings also has a licensed online casino and sportsbook to look after.

DraftKings Spooked by Kalshi Suit, Pulls Out of Utah

DraftKings is among a group of prediction markets to pull out of Utah as the state declares war on the exchanges.

Sites including DraftKings and Fanatics have said they will pull their sports event contracts from their platforms in Utah.

Though DraftKings doesn’t offer its sportsbook in Utah, its DraftKings Predictions platform is live and operational under federal oversight.

However, Utah’s legal action against Kalshi has spooked several providers, DraftKings included.

DraftKings said it was pulling its sports, novelty, political, and other event contracts from Utah. However, financial event contracts are still available. These include trades on stocks, cryptos, and commodities.

Utah’s War on Prediction Markets

Utah has some of the strictest anti-gambling laws in the U.S. Online casinos and sportsbooks are strictly forbidden, and the state has no lottery or land-based casinos.

Last month, Utah sued Kalshi and declared online gambling a “public nuisance”. Kalshi, the attorney general argued, causes “significant and ongoing harm to a significant number of Utahns.”

Utah has now been summoned to “personally appear” in the Third District Court in Salt Lake City Dec. 4 for its initial appearance.

However, the move follows a similar suit from Kalshi’s regulator the CFTC suing Utah over state interference. CFTC chairman Michael Selig said that the body had the “expertise and responsibility to defend its exclusive jurisdiction” over derivatives.

CFTC Issues Warning to Geofenced Platforms

DraftKings is under pressure as its prediction site is regulated by the CFTC. Its sportsbook and casino are regulated on a state level. It already operates in multiple states and is a market leader in Pennsylvania, West Virginia, and elsewhere.

Though its DraftKings Predictions platform is available in states where sports betting is allowed, it doesn’t offer its sports event contracts.

The CFTC issued a statement this week, warning DCMs (Designated Contract Markets) to “provide competitive, open, fair, and impartial access”. Geographics access restrictions, it warned, “are inconsistent” with the Commodity Exchange Act.

Despite the warning, DraftKings has been spooked by Utah’s action against Kalshi and has pulled out.