DraftKings’ Q2 2026 Call: Competitor Spending, DKX Timelines, and iGaming Momentum Don’t Align

Date of Call: Aug 7, 2026

Financials Results

• Revenue: Not explicitly provided; normalized revenue growth of 10% YOY in Q2.

Guidance:

• Revenue for FY 2026 expected to be $6.5B to $6.9B.
• Adjusted EBITDA for FY 2026 expected to be $700M to $900M.
• Core business expected to generate approximately $1B in adjusted EBITDA in 2026.

Business Commentary:

Strong Core Business Performance:

• DraftKings reported generating $115 million of adjusted EBITDA in Q2 2026, which would have been higher without customer-friendly sports outcomes and higher-than-expected customer acquisition.
• The strong performance was driven by significant growth in the core business, increased customer acquisition, and strong retention and engagement of new customers.

Rapid Growth in Predictions Offering:

• Over 600,000 customers have engaged with DraftKings' predictions offering year-to-date, with annualized total volume traded growing nearly 5x from $2.3 billion to $11 billion from April to July 2026.
• The faster-than-anticipated growth is attributed to the successful execution of the super app strategy and strong customer acquisition in states without regulated sports books.

Customer Acquisition and Cost Efficiency:

• Customer acquisition grew nearly 75% year-over-year, with underlying customer acquisition costs coming in approximately 25% better than anticipated.
• The efficiency was driven by investments in customer acquisition, especially during high-interest events like the NBA Finals and the World Cup.

Increased Sports Consumer Volume:

• Sports consumer volume, which includes sportsbook handles plus predictions consumer volume, increased 15% year-over-year in Q2 2026.
• This growth was supported by strong customer engagement and the rollout of the super app, which provided enhanced offerings in sports, fantasy, and iGaming.

Positive Outlook and Guidance:

• DraftKings maintained its fiscal year 2026 revenue guidance range of $6.5 billion to $6.9 billion and adjusted EBITDA guidance range of $700 million to $900 million, considering the expected investment in predictions.
• The confidence in achieving these targets is supported by strong customer acquisition, retention, engagement, and operating efficiency.

Sentiment Analysis:

Overall Tone: Positive

• "We had a fantastic second quarter." "Our confidence in our ability to win in predictions has only grown." "We are on offense. The core business is firing." "We are maintaining our fiscal year 2026 revenue guidance range..." "The progress we made in the second quarter made that path more tangible."

Q&A:

• Question from Stephen Grambling (Morgan Stanley): Concerns about prediction markets cannibalizing sportsbook volume and limitations of the vertically integrated platform.
  Response: Management believes predictions are an incremental, not cannibalistic, opportunity, especially in states without legal sportsbooks, citing minimal customer overlap and strong retention.

• Question from Dan Politzer (JP Morgan): How competitive promotional investments affect the outlook.
  Response: Management views a peer's increased promotional spend as a minor 'blip,' maintains confidence in its efficient promotional strategy, and expects to continue growing handle and GGR share.

• Question from David Katz (Jefferies): Economics and profitability of prediction market players and best execution requirements.
  Response: Management sees a similar path to profitability as sportsbook, is cautious but disciplined in assumptions, and plans to migrate most volume to its own platform (DKX) over time.

• Question from Jordan Bender (Citizens): Cross-sell from other verticals (DFS, horse, etc.) into predictions and the role of ESPN.
  Response: Management emphasizes a full product suite and strong cross-sell engine, drawing parallels to past state launches and seeing similar or better performance in predictions.

• Question from Sean Kelly (Bank of America): Flexibility to exceed prediction market spending targets if customer acquisition is strong.
  Response: Management will remain data-driven and follow the ROI; it spent 10% more than expected in Q2 and saw 25% better CACs, indicating willingness to invest if returns justify.

• Question from Brant Montour (Barclays): Building blocks for strong Q4 guidance and expectations for sports and iGaming growth.
  Response: Management cites Q4 as seasonally biggest quarter, strength in core business (on track for ~$1B adjusted EBITDA in 2026), and momentum in handle growth as key drivers.

• Question from Clark Lampin (BTIG): Strategy and fee structure impact as volume moves through DK Exchange.
  Response: Management plans to phase volume to its own exchange while prioritizing customer experience; capturing more exchange fees will improve unit economics and LTV advantage.

• Question from Robin Farley (UBS): Components of the unchanged EBITDA guidance.
  Response: Guidance is driven by core business (~$1B adjusted EBITDA) and ~$200M-$300M investment in predictions; minor adjustments are made but not material enough to call out.

• Question from Trey Bowers (Wells Fargo): Promotional environment and expectations for iGaming growth.
  Response: Management sees momentum in iGaming, citing successful product launches (Lightning Link, Flex Spins) and stabilized share, with expectations for improvement in the coming months.

• Question from Jed Kelly (Oppenheimer): Reasons for slower prediction customer acquisition versus population potential.
  Response: Attributed to cautious investment due to learning/ regulatory factors and an education period for customers in new states; expects faster ramp as awareness grows.

• Question from Bernie McTiernan (Needham): Structural advantage and network effect from vertical integration in predictions.
  Response: Vertical integration in predictions (brokerage, exchange, market making) allows capture of more unit economics and enables faster product development and customer retention, similar to the sportsbook playbook.

• Question from Ben Chaykin (Mizuko): Clarification on efficiency of external marketing spend between OSB and predictions.
  Response: Efficiency gains are due to World Cup tailwinds and optimized spend across all verticals; strong performance in core sports and predictions is driving overall efficiency.

• Question from Joe Stoff (Susquehanna): Most relevant product upgrades for the new sports calendar.
  Response: Upcoming August upgrade includes new features and content; recent successful features include combos in predictions and product launches in sportsbook and gaming.

Contradiction Point 1

Competitive Promotional Environment Assessment

Contradiction on whether a recent competitor spending increase is a minor fluctuation or a significant shift, impacting the view on competitive dynamics and strategic response.

Dan Politzer (JP Morgan) - Dan Politzer (JP Morgan)

2026Q2: Fluctuations in competitor promotion spending are not new, and the recent increase is not seen as a major shift. - Alan Ellenson(CFO)

How does the competitive promotional environment, including a peer's increased sports investment, affect your confidence in achieving 2026 guidance? - Shaun Kelley (Bank of America)

2026Q2: This increase is 'a blip.' DraftKings has consistently been more efficient with promotions. - Jason Robins(CEO)

Contradiction Point 2

Timeline for DKX Exchange Volume Migration

Contradiction on the expected speed of migrating prediction market volume to the internal DKX platform, affecting operational strategy and platform integration plans.

David Katz (Jefferies) - David Katz (Jefferies)

2026Q2: The plan is to shift sports volume to DK Exchange in the coming months, with some tail sports and non-sports content remaining on third parties for now. - Jason Robins(CEO)

What is the path to profitability for prediction market customers, and can all volume be routed through your own platform, such as DKX? - Clark Lampen (BTIG)

2026Q2: The company will phase in DK Exchange, aiming for the vast majority of major sports content ... to move as fast as reasonably possible. - Jason Robins(CEO)

Contradiction Point 3

Customer Acquisition Cost (CAC) Efficiency and Investment Strategy

Contradiction on whether prediction CACs are improving or if investment efficiency is broad-based, affecting the interpretation of marketing spend effectiveness and growth drivers.

Ben Chaykin (Mizuko) - Ben Chaykin (Mizuko)

2026Q2: The increased spend on predictions might involve shifting dollars from other verticals, not just incremental enterprise spend. Sportsbook customer acquisition was exceptionally efficient in Q2, with a 40% year-over-year increase at the best CACs since Q1 2025. - Alan Ellenson(CFO)

Can you clarify how the 10% increase in prediction customer acquisition spending aligns with the overall efficiency in sportsbook customer acquisition? - Jordan Bender (Citizens Bank)

2026Q1: Customer acquisition costs (CACs) for predictions have dropped more than 80% and are scaling faster than expected. - Alan Ellingson(CFO)

Contradiction Point 4

iGaming Business Performance and Outlook

Contradiction on the momentum and share position in the iGaming vertical, influencing the assessment of growth opportunities and competitive positioning in that segment.

Trey Bowers (Wells Fargo) - Trey Bowers (Wells Fargo)

2026Q2: iGaming has started to show momentum. Strong performance was aided by the successful launch of the Lightning Link land-based game online and a proprietary product called Flex Spins... After several quarters of losing share, share has stabilized, and the company hopes to start gaining share in the coming months. - Jason Robbins(CEO)

How is the iGaming business performing, and what are the expectations for the rest of the year? - David Katz (Jefferies)

2026Q1: There is also a significant opportunity in iGaming, where the company has lagged but recently increased team focus. - Alan Ellingson(CFO)

Contradiction Point 5

Nature of Prediction Market Customer Acquisition

Contradiction on whether prediction market customers are new or overlapping with existing sportsbook customers, impacting the strategy for user growth and market penetration.

Stephen Grambling (Morgan Stanley) - Stephen Grambling (Morgan Stanley)

2026Q2: In these markets, DraftKings' customer profile is very similar to its sportsbook customers. - Jason Robbins(CEO)

How do you differentiate your customer base and product offerings from competitors in prediction markets compared to traditional sportsbooks? - Eric Sheridan (Goldman Sachs Group, Inc.)

2025Q4: Predictions is not seen as cannibalizing existing users. The main opportunity is incremental users, especially in new states where DraftKings wasn't previously present with online sports betting. - Jason Robins(CEO)