DraftKings' Predictions Investment Faces a Customer Profitability Test

DraftKings expects its expansion in prediction markets to have an impact of up to $1.05 billion on adjusted EBITDA in 2026 and 2027. The company has the money to attract traders, but it is unclear whether these users will return once promotional offers end.

According to the company's earnings presentation dated November 5, between $650 million and $700 million has been budgeted for Predictions in 2026, and another $250 million to $350 million will be spent in 2027. Because the revenue expected from Predictions this year is small, DraftKings is taking on a significant cost for customers it hopes will become more valuable in the future.

Ivan Soloviov, who has worked 18 years in lottery finance and served as CFO of a national lottery operator in Europe, says investors should not look only at trading volume. Soloviov notes that 2026 spending is largely a customer acquisition cost, and that the first half of 2027 may show whether new customers are committing to the product. In his view, the key measure will be net revenue per active Predictions customer after promotions stop.

DraftKings says the retention and engagement levels of new Predictions customers are similar to those of sports betting customers. However, since it has not shared enough data on the post-promotion period, it is not yet clear whether this pattern will continue. The company projects Predictions revenue of $650 million to $750 million for 2027, but does not expect Predictions itself to be profitable that year.

In September and October, the DKeX exchange recorded gross commissions equal to 11.1% of consumer trading volume. DraftKings collected 65.6% of that amount through exchange fees, brokerage fees and market-making activities.