DraftKings' Strategic Shift to Web3 and NFTs: Identifying Undervalued Assets in the iGaming-Blockchain Convergence

The intersection of iGaming and blockchain technology is reshaping the digital entertainment landscape, and DraftKings (NASDAQ: DKNG) has emerged as a pivotal player in this evolution. Over the past three years, the company has aggressively pursued Web3 integration, leveraging NFTs, prediction markets, and strategic partnerships to redefine its market positioning. As of Q3 2025, DraftKings reported $1.14 billion in revenue, a 4% year-over-year increase, while its share price remains significantly undervalued relative to intrinsic metrics. This article examines DraftKings' Web3 initiatives, evaluates its competitive advantages, and identifies why its blockchain-driven strategies represent a compelling investment opportunity in the iGaming-blockchain convergence.

Web3 as a Strategic Pillar: From NFTs to Prediction Markets

DraftKings' foray into Web3 began in 2021 with a strategic partnership with Polygon, a scalable Ethereum Layer 2 blockchain. This collaboration enabled the launch of the DraftKings Marketplace, which leverages Polygon's eco-friendly infrastructure to host NFT airdrops and secondary transactions. Early collections, such as the , featuring icons like Tom Brady and Wayne Gretzky, sold out rapidly, underscoring consumer demand for sports-themed digital assets. By 2022, DraftKings expanded its Web3 footprint with the 2022 College Hoops Collection, timed to the NCAA basketball tournament, and introduced NFT utility in the form of DraftKings site credits for betting and contests.

The company's vision for Web3 extends beyond NFTs. In 2025, DraftKings launched DraftKings Predictions, a CFTC-regulated prediction market platform that allows users to trade on real-world outcomes in sports, politics, and entertainment. This move marks a significant pivot into financialized betting, a sector projected to grow as states like California and Texas-where DraftKings now operates-legalize online betting. The platform integrates Railbird Exchange, a CFTC-licensed clearinghouse, and partners with Polymarket to reduce counterparty risk and enhance liquidity. By combining blockchain's transparency with regulated financial markets, DraftKings is positioning itself as a bridge between traditional iGaming and decentralized finance (DeFi).

Undervaluation Amidst Structural Growth

Despite these innovations, DraftKings' stock remains undervalued relative to its intrinsic metrics. A discounted cash flow (DCF) analysis suggests the company is trading at a 62.7% to 65% discount to its projected intrinsic value, with free cash flows expected to reach $3.8 billion by 2035. Its price-to-sales (P/S) ratio of 3.07x also lags behind the industry's fair ratio of 3.30x, indicating further upside potential. Analysts on platforms like Simply Wall St and MarketBeat project a 36.2% to 37.88% price appreciation, with a consensus target of $47.48 per share.

This undervaluation is partly due to short-term revenue misses, such as the Q3 2025 report, which fell short of analyst estimates by $120 million. However, the company's operational metrics tell a different story: monthly unique payers (MUPs) grew 2% year-over-year to 3.6 million, while average revenue per MUP (ARPMUP) increased 3% to $106, driven by iGaming growth and improved sportsbook hold percentages. DraftKings' iGaming segment, now a "second growth engine," generated $426 million in Q4 2025 revenue, reflecting a 23% year-over-year increase. These figures highlight the company's ability to monetize its Web3 and iGaming innovations despite regulatory headwinds.

Strategic Partnerships and Market Expansion

DraftKings' success in the iGaming-blockchain space is underpinned by its ecosystem of partnerships. Collaborations with ESPN, NBCUniversal, and Barstool Sports are integrating prediction markets into mainstream media, while its validator role on Polygon underscores its commitment to blockchain infrastructure. The company's recent Spanish-language features, launched ahead of the 2026 World Cup, further expand its reach into underserved demographics.

The prediction markets sector itself is experiencing explosive growth. Platforms like Polymarket and Kalshi reported record trading volumes in October 2025, signaling strong consumer appetite for outcome-based betting. DraftKings' entry into this space, coupled with its regulatory compliance and media partnerships, positions it to capture a significant share of this emerging market.

Risks and Opportunities

While DraftKings' Web3 initiatives are promising, risks remain. Regulatory uncertainty in the NFT and prediction markets could delay expansion, and competition from incumbents like FanDuel and CME Group is intensifying. However, DraftKings' first-mover advantage in integrating blockchain with iGaming, combined with its $1 billion share buyback program and $2 billion in stock repurchase authorization, signals confidence in its long-term strategy.

Conclusion: A High-Conviction Play in the iGaming-Blockchain Convergence

DraftKings' strategic shift to Web3 and NFTs represents a high-conviction opportunity for investors seeking exposure to the iGaming-blockchain convergence. By leveraging blockchain's transparency, utility, and scalability, the company is not only enhancing user engagement but also creating new revenue streams in prediction markets and digital collectibles. With a stock price that remains significantly undervalued relative to its intrinsic value and growth trajectory, DraftKings offers a compelling case for long-term investment in a sector poised for disruption.