Key Takeaways
- DraftKings shares fell as low as $18.58 on Thursday, its lowest level in more than three years, extending a slide shared by rival Flutter Entertainment.
- The stock has lost roughly half its value over the past year as sportsbook growth slows and prediction markets like Kalshi and Polymarket take share.
- CEO Jason Robins says DraftKings is nearing a double-digit share of sports prediction-market volume, even as the company plans to spend $200 million to $300 million more this year chasing that market.
DraftKings stock fell to its lowest level in more than three years this week, closing Wednesday at $19 before dipping as low as $18.58 on Thursday.
The slide reflects disappointing earnings, mounting competition from prediction markets, and growing scrutiny of the sportsbook’s gambling practices.
A Rough Stretch for Sportsbook Stocks
DraftKings shares have lost roughly half their value over the past year as the company faces slowing sportsbook growth, rising costs, and increased competition from prediction markets like Kalshi and Polymarket. FanDuel parent Flutter Entertainment has felt similar pressure, with its stock also hitting record lows this week.
The company missed Wall Street revenue estimates last quarter as bettor-friendly results and heavier promotional spending ate into the top line. DraftKings posted a $67.6 million net loss, compared with a $157.9 million profit a year earlier.
The company has maintained that its core sportsbook business remains on track to generate roughly $1 billion in adjusted EBITDA this year.
Prediction Markets Add to the Pressure
DraftKings has struggled to gain ground against Kalshi and Polymarket since entering prediction markets last year. It launched its own exchange, DKeX, in June to cut reliance on third parties.
Robins said last week that DraftKings was approaching a double-digit share of sports prediction-market volume, citing nearly fivefold growth in annualized trading volume between April and July. Needham estimated Kalshi still accounted for 76% of sports prediction-market volume during the NFL’s opening week, compared with roughly 3% for DKeX, excluding trades routed through other exchanges.
Robins has argued that prediction markets have had little real impact on DraftKings’ sportsbook business, even as the stock keeps reacting to headlines about the category. “We see a headline that is positive on predictions, and everyone in the company celebrates and our stock goes down,” he said at Front Office Sports’ Asset Class conference last month. “Or we see like the Ninth Circuit rules against predictions, and we’re like, ugh, and the stock pops.”
Added Scrutiny Over AI Practices
DraftKings also faces scrutiny following a New York Times investigation last month alleging the company used artificial intelligence to target promotions toward customers likely to lose money, while shelving similar technology designed to flag problem gambling. DraftKings has disputed the findings and denied making its products more addictive.
The Massachusetts Gaming Commission has since begun reviewing how DraftKings and other sportsbooks use AI. A proposed class-action lawsuit filed Wednesday in Massachusetts federal court also seeks relief over the company’s alleged targeting of vulnerable gamblers through AI.
Why This Matters
DraftKings built its market position on sportsbook growth, but that growth is slowing just as a new category of competitor, and a new round of regulatory attention, puts pressure on the stock from both sides.
How the company balances its prediction-market spending against sportsbook profitability, and how regulators respond to the AI scrutiny, will shape whether this slide is a rough quarter or a longer repricing of the stock.
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