Facing the rapid erosion of the market platform predicted since the beginning of the year, DraftKings released a quite positive signal in its first quarter financial report for 2026 published on Friday. CEO Jason Robins expressed more confidence during the earnings call than in February last year when he provided cautious financial guidance, stating that the market-making department established earlier this year has become one of the fastest profit-generating segments in the company's history, and its proprietary prediction exchange is about to be fully launched. This combination is positioned by Robins as a synchronous accelerator in terms of innovation, customer experience, and economic benefits. More notably, Robins has set an ambitious goal for this emerging business line - with the company's existing modeling capabilities, DraftKings theoretically could become one of the top three, or even the strongest, prediction market makers in the world.
The proprietary exchange is poised to launch, entering intense competition with Fantasy
DraftKings' proprietary prediction exchange will operate relying on the wholly-owned subsidiary Railbird Exchange, which was acquired last October for approximately $84.8 million. This arrangement gives it a first-mover advantage in the competition with its old rival Fantasy - the latter only mentioned during the Wednesday earnings call that Fantasy had just started a market-making service trial on a third-party platform last month, and formal operations are expected to be implemented later this year. A deeper signal is that DraftKings has included prediction market investments in its full-year financial guidance for the first time - CFO Allen Ellison reiterated the company's revenue forecast for the fiscal year 2026 to be between $6.5 and $6.9 billion, with adjusted EBITDA between $700 million and $900 million, and revealed that this year's investment in the prediction business is about $200 to $300 million.
On the overall industry landscape level, the total volume of prediction transactions across the market last month approached $30 billion, with Kalshi wresting the top spot from Poli Markets. According to Bernstein data, the two companies had a combined monthly transaction volume of nearly $24 billion in April, with Kalshi leading with a 62% market share, of which sports event contracts contributed about 72% of the volume. Kalshi announced on Thursday that it had completed a $1 billion Series F funding round, with its valuation soaring to $22 billion, far exceeding the current market capitalization of DraftKings and Flutter. Robinhood's related segment revenue also soared 320% year-over-year to about $147 million in the first quarter.
Q1 performance is robust, monthly active user metrics are differentiated
Performance-wise, DraftKings' first-quarter revenue reached $1.65 billion, up 17% year-over-year, in line with analyst expectations. Adjusted EBITDA refreshed the company's quarterly record at $168 million. The average monthly independent paying users slightly dropped to about 4.2 million, but excluding the lottery business, this metric increased slightly by 2% year-over-year to 3.9 million. More notably, the average revenue per user jumped from $108 in the same period last year to $131, and even higher to $141 excluding the lottery.
In specific growth data for the prediction business, DraftKings Predictions' consumer transaction volume broke $1 billion in April, with an annualized total transaction volume exceeding $2.3 billion, with month-over-month growth rates of 38% and 43%, respectively. Although the company admits that the prediction business currently only has a slight impact on the overall sports betting volume and its contribution to revenue is almost negligible, Robins is still confident about this emerging category in its early stages - he likened it to the first inning of a baseball game and predicted that DraftKings will establish a leadership position in the sports prediction field by the end of this year.
PASA official website continues to track the evolving competitive landscape of North American sports betting and prediction markets, noting that DraftKings is trying to carve out its own path in the collision of old and new betting formats by deeply integrating its internal market-making capabilities with its proprietary exchange.
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