DraftKings set a disappointing tone for Wall Street in its latest earnings report for 2026: annual revenue guidance of $6.5 billion to $6.9 billion, well below analysts' expectations of $7.3 billion. Upon the news, the stock price plummeted 18% in after-hours trading, falling to a near three-year low. Simply put, the company itself admits that this year might not be so optimistic. Although CEO Jason Robins described the forecast market as the "biggest growth opportunity" since the PASPA ruling, investors are more concerned about whether these new products will bring incremental gains or simply cannibalize existing sports betting shares. Want to know how the forecast market is shaking up the traditional gambling giants' business models? Follow ongoing industry changes on the PASA official website.
First, the "open secret" of conservative guidance: Revenue expectations below Wall Street consensus
Key financial metrics set by DraftKings for the fiscal year 2026:
Revenue guidance: $6.5 billion to $6.9 billion (midpoint $6.7 billion)
Wall Street consensus expectations: $7.3 billion (down 8%)
Stock price reaction: The stock plummeted 18% post-earnings, hitting a new low since May 2023
In the fourth quarter of 2025, DraftKings actually delivered an impressive report card: revenue of $1.9 billion, a 43% year-over-year increase; annual revenue broke the $6 billion mark for the first time, reaching $6.1 billion. However, this was still below the company's initial target of $6.3 billion to $6.6 billion, and adjusted EBITDA also fell short by $250 million.
Second, the forecast market: A "New World" or a "Gold-Eating Beast"?
DraftKings launched its forecast market products last December, with Super Bowl day trading volume hitting a record three times the daily peak. Robins has high hopes for it, believing that the nationwide forecast market could generate $10 billion in gross revenue opportunities annually.
However, investors and analysts are more concerned about another issue: Will the forecast market cannibalize the sports betting business?
Robins' response was:
January third-party and internal data show that the forecast market had a "minimal" impact on the month's betting volume
Mainly affecting low-margin customers, "the impact on revenue is almost negligible"
However, DraftKings explicitly listed "product cannibalization" as a risk factor in its 10-K filing submitted to the SEC: "New products may continue to erode the market share of existing products."
Third, why so conservative? Lessons from last year's "face-slapping"
Robins candidly stated that the initial expectations for the full year of 2025 were "too optimistic," and failing to meet them left him "very frustrated." After debriefing with the financial team, the company is determined not to repeat the same mistake.
Looking back at 2023, DraftKings had anticipated a net loss for the year, but the actual loss was much lower than expected (actual loss of $151 million, expected loss of $350 million to $450 million). This "low expectations, high achievement" strategy might just be the script for 2026—set the expectations low, making it easier to meet them later.
Fourth, forecast market investment: Competitors are burning money, DraftKings has yet to crunch the numbers
According to analysts, some competitors plan to invest $200 million to $300 million in the forecast market by 2026. However, DraftKings has not yet included forecast market investments in its 2026 guidance, and Robins believes it's "too early" to set specific numbers. A fund manager at Gabelli Funds thinks that an annual investment of $100 million is not "excessive."
Meanwhile, statements by the new CFTC chairman have injected policy certainty into the forecast market, with federal-level support increasing. The boundaries between traditional sports betting and the forecast market are becoming increasingly blurred.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel: https://t.me/pasa_news
Original in-depth gambling channel: https://t.me/gamblingdeep
Free data reports: @pasa_research
PASA Matrix: @pasa002_bot
PASA official website: https://www.pasa.news
