What Can Make DraftKings Stock A Buy?

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One business stands out at DraftKings (DKNG): Predictions, its prediction market. You probably still think of DraftKings as a sportsbook, but management is building the platform into what it calls a Super App. Yet the stock lost 39.9% over the past year, while the S&P 500 returned 17.1%. That is the contradiction: management is upbeat about its plans, yet investors have sold the stock. So is Predictions bringing DraftKings customers it could not reach before?

DraftKings Is Finding New Customers Through Predictions

So far, yes. During the August 7, 2026 call, management said DraftKings is seeing massive new customer acquisition in states without a regulated sportsbook, such as California and Texas. The sportsbook cannot sign up these people at all, and over 600,000 customers had used Predictions in 2026 by then.

The business is also growing fast. Management said annualized volume traded grew nearly 5x from April to July, rising to $11 billion from $2.3 billion.

The largest prediction market operator also has few of DraftKings’ sportsbook customers. Management sees only about 1% overlap between DraftKings’ sportsbook customers and that operator’s in states where both are offered. In California and Texas, management said the customers it is attracting look very similar to the ones the sportsbook gets elsewhere. Predictions is more than a side product: it reaches sportsbook-style customers in states where the sportsbook is not offered.

Is DraftKings Still Growing Its Sportsbook?

In bets taken, yes. Sportsbook handle, the money customers wagered, rose 11% from a year earlier in fiscal Q2 2026. Management said July handle was up 20%. DraftKings’ share of handle in its sportsbook states also improved year over year for a third straight quarter.

Total reported revenue at DraftKings is weaker, falling 4.6% from a year earlier in fiscal Q2 2026. Management said revenue would have grown 10% without sports results that went customers’ way and the cost of signing up new customers. Of the gap between that 10% and the reported decline, the company put about $80 million down to sports results. It said the rest came from customer acquisition. Promotions to win new customers reduce reported revenue.

That matters because DraftKings is spending at the same time. Management expects its core business to produce about $1 billion of adjusted EBITDA, the company’s own profit measure, in 2026. Separately, it plans to invest $200 million to $300 million in Predictions in 2026. The company also kept its 2026 revenue guidance of $6.5 billion to $6.9 billion. Over the twelve months to June 30, 2026, DraftKings reported an operating loss of $182 million, though it produced $497 million of free cash flow.

What Could Go Wrong For DraftKings’ Predictions Business?

Growth in volume traded is not revenue. Management said revenue per customer on Predictions will be lower than on the sportsbook, though it expects the higher margins to bring a similar level of gross profit per customer over time. That is a forecast, not a result.

Regulation is the other open question. Management said some regulatory questions make the outlook not entirely certain, adding that DraftKings is not leaning in quite as hard because of them. If gross profit per customer falls short, or if regulation changes the product, the new customers would be worth less to DraftKings than management expects.

For now, Predictions is bringing in customers the sportsbook cannot reach, and the sportsbook is still taking more bets, even though DraftKings’ total reported revenue fell in fiscal Q2 2026. Sportsbook revenue and Predictions volume are the measures to watch in DraftKings’ next report, expected on or around October 30, 2026.

How To Act On DKNG?

Not necessarily on DraftKings alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. Here is one company from DraftKings’ own industry that has beaten it. Over the five years to October 2026, Las Vegas Sands stock rose 2.9%, while DraftKings stock fell 58%.

Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.

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