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Will DraftKings' $650M-$700M Predictions Bet Pay Off in 2027?
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Key Takeaways
DraftKings expects $650M-$750M in 2027 Predictions revenues, backed by engagement from over 1.6M customers.
DraftKings expects its 2026 Predictions customer cohort to generate $350M in gross profit in 2027.
DKNG aims to narrow Predictions EBITDA losses to $250M-$350M in 2027 amid spending and regulatory risks.
DraftKings Inc. (DKNG - Free Report) is expanding its Predictions business with a planned 2026 investment representing a negative adjusted EBITDA contribution of $650 million-$700 million. The company projects Predictions revenues of $650 million-$750 million in 2027, with customers acquired in 2026 expected to contribute meaningful gross profit.
The investment case is supported by encouraging customer performance. As of third-quarter 2026, more than 1.6 million customers had engaged with Predictions. DraftKings expects its 2026 customer cohort to pay back acquisition investment in approximately 20 months, ahead of its two-year target. Retention and engagement are tracking in line with Sportsbook customers, while the cohort is expected to generate approximately $350 million in gross profit during 2027.
Product adoption supports the monetization opportunity. Combos accounted for 27% of Predictions consumer volume in October, with more than 70% of Predictions customers trading them during the month. DraftKings’ ownership of its brokerage, exchange and market-making operations allows it to capture more of the value generated by trading activity while maintaining control over product development.
The financial trajectory remains sensitive to promotional spending and regulatory developments. New-customer promotions are expected to offset most of Predictions' gross revenues in 2026. DraftKings lowered its companywide 2026 adjusted EBITDA guidance to $175 million-$275 million from $700 million-$900 million, primarily reflecting the increased Predictions investment. The company plans to adjust Predictions investment as the regulatory environment evolves.
DraftKings’ customer retention and projected cohort gross profit support the prospect of its Predictions investment beginning to deliver financial benefits in 2027. Realizing those benefits will likely depend on converting trading activity into revenues and narrowing adjusted EBITDA losses to $250 million-$350 million. Continued acquisition spending and regulatory uncertainty could influence the pace of returns.
DKNG’s Price Performance, Valuation & Estimates
DraftKings’ shares have lost 22.8% in the past three months compared with the industry’s 4.2% fall. In the same time frame, other industry players like Boyd Gaming Corporation (BYD - Free Report) and PENN Entertainment, Inc. (PENN - Free Report) have declined 6.9% and 3.7%, respectively, while Accel Entertainment, Inc. (ACEL - Free Report) has gained 12.6%.
DKNG Three-Month Price Performance
Image Source: Zacks Investment Research
DKNG stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 1.29, below the industry average of 1.86. Conversely, industry players, such as Accel Entertainment, PENN Entertainment and Boyd Gaming, have P/S ratios of 0.74, 0.32 and 1.32, respectively.
DKNG’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DraftKings’ 2026 earnings per share has declined in the past 60 days.
EPS Trend of DKNG Stock
Image Source: Zacks Investment Research
The company is likely to report solid earnings, with projections indicating a 21.2% surge in 2026. Conversely, industry players like Accel Entertainment and PENN Entertainment are likely to witness a rise of 26.7% and 117.2%, respectively, year over year in 2026 earnings. Meanwhile, BYD’s 2026 earnings are expected to decline 3.8% year over year.
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Will DraftKings' $650M-$700M Predictions Bet Pay Off in 2027?
Key Takeaways
DraftKings Inc. (DKNG - Free Report) is expanding its Predictions business with a planned 2026 investment representing a negative adjusted EBITDA contribution of $650 million-$700 million. The company projects Predictions revenues of $650 million-$750 million in 2027, with customers acquired in 2026 expected to contribute meaningful gross profit.
The investment case is supported by encouraging customer performance. As of third-quarter 2026, more than 1.6 million customers had engaged with Predictions. DraftKings expects its 2026 customer cohort to pay back acquisition investment in approximately 20 months, ahead of its two-year target. Retention and engagement are tracking in line with Sportsbook customers, while the cohort is expected to generate approximately $350 million in gross profit during 2027.
Product adoption supports the monetization opportunity. Combos accounted for 27% of Predictions consumer volume in October, with more than 70% of Predictions customers trading them during the month. DraftKings’ ownership of its brokerage, exchange and market-making operations allows it to capture more of the value generated by trading activity while maintaining control over product development.
The financial trajectory remains sensitive to promotional spending and regulatory developments. New-customer promotions are expected to offset most of Predictions' gross revenues in 2026. DraftKings lowered its companywide 2026 adjusted EBITDA guidance to $175 million-$275 million from $700 million-$900 million, primarily reflecting the increased Predictions investment. The company plans to adjust Predictions investment as the regulatory environment evolves.
DraftKings’ customer retention and projected cohort gross profit support the prospect of its Predictions investment beginning to deliver financial benefits in 2027. Realizing those benefits will likely depend on converting trading activity into revenues and narrowing adjusted EBITDA losses to $250 million-$350 million. Continued acquisition spending and regulatory uncertainty could influence the pace of returns.
DKNG’s Price Performance, Valuation & Estimates
DraftKings’ shares have lost 22.8% in the past three months compared with the industry’s 4.2% fall. In the same time frame, other industry players like Boyd Gaming Corporation (BYD - Free Report) and PENN Entertainment, Inc. (PENN - Free Report) have declined 6.9% and 3.7%, respectively, while Accel Entertainment, Inc. (ACEL - Free Report) has gained 12.6%.
DKNG Three-Month Price Performance
Image Source: Zacks Investment Research
DKNG stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 1.29, below the industry average of 1.86. Conversely, industry players, such as Accel Entertainment, PENN Entertainment and Boyd Gaming, have P/S ratios of 0.74, 0.32 and 1.32, respectively.
DKNG’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DraftKings’ 2026 earnings per share has declined in the past 60 days.
EPS Trend of DKNG Stock
Image Source: Zacks Investment Research
The company is likely to report solid earnings, with projections indicating a 21.2% surge in 2026. Conversely, industry players like Accel Entertainment and PENN Entertainment are likely to witness a rise of 26.7% and 117.2%, respectively, year over year in 2026 earnings. Meanwhile, BYD’s 2026 earnings are expected to decline 3.8% year over year.
DKNG stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.