DraftKings Shares Plunge 26% After Raising Prediction Market Spending

DraftKings shares dropped approximately 26% following a third-quarter revenue miss and a 2027 earnings forecast that fell short of analyst estimates. The company also reduced its outlook for fiscal year 2026.

Investors reacted negatively to a sharp increase in spending on prediction markets, which rose to between $650 million and $700 million from an initial estimate of $200 million to $300 million. CEO Jason Robins characterized the spending as marketing costs intended to acquire high-value customers, noting that cohorts acquired this year are projected to generate $350 million in gross profit next year.

Robins acknowledged investor anxiety regarding regulatory uncertainty and a pending Supreme Court decision on sports contracts. He argued that the company is strategically positioned to remain viable regardless of the court's ruling, unlike its competitors.