DraftKings Q2 revenue falls 5% as sports margin hits 6.8%

DraftKings Inc. (Nasdaq: DKNG) reported second-quarter 2026 revenue of $1.44 billion on August 6, 2026, down 4.6% on the $1.51 billion it posted a year earlier — even though customers settled $1.7 billion more in wagers and trades than in the same period of 2025. The company blamed customer-friendly sport outcomes and heavier promotional reinvestment. The result matters to shareholders, to rivals pricing the same markets, and to bettors wondering why offers have grown so generous.

Why did revenue fall while betting volume rose?

A sportsbook’s revenue is not what customers stake. It is what they stake multiplied by the share the operator keeps once bets settle — the hold, which DraftKings reports as Sports Net Revenue Margin. Volume is a function of marketing and product. Hold, over a single quarter, is a function of which teams win.

In the three months to June 30, 2026, that margin came in at 6.8%, against 8.7% a year earlier. Applying the 2025 margin to the 2026 volume would have produced roughly $1.14 billion of sports revenue instead of the $891.9 million DraftKings booked — a shortfall of about $251 million, on volume that grew. Nothing in the operator’s pricing had to go wrong for that to happen. Favourites and overs landing is enough.

What did the promotional spend do to profit?

The second driver was self-inflicted. Sales and marketing costs rose 38% to $322.5 million as DraftKings pushed acquisition offers behind its Sportsbook and its Predictions product, which launched in December 2025. Monthly Unique Payers grew about 9% to 3.6 million, but average revenue per payer fell 13% to $132.

The combination flipped the income statement. DraftKings recorded a $68.2 million operating loss against $150.6 million of operating income a year earlier, and a net loss of $67.6 million against net income of $157.9 million. Adjusted EBITDA fell 62% to $114.6 million.

“Our core business remains on track to generate approximately $1 billion of Adjusted EBITDA this year, providing us with financial flexibility to invest behind the significant opportunity that we are seeing in Predictions,” said Alan Ellingson, chief financial officer of DraftKings. (SEC filing)

What is actually inside that 6.8% margin?

One detail deserves scepticism. DraftKings now defines Sports Consumer Volume as settled wagers or trades across Sportsbook and Prediction Markets, and Sports Revenue as sportsbook plus prediction-market revenue. The 6.8% is a blended figure covering a hold-based business and a fee-based one, measured against an 8.7% quarter that predated Predictions entirely.

Prediction markets earn a thin commission on matched trades rather than a margin on losing bets, so growing that volume compresses the reported percentage by arithmetic alone. The company has not disclosed the split.

“We delivered a strong second quarter and enter the back half of the year with real momentum, as our core business grew across handle, users, and engagement,” said Jason Robins, chief executive and co-founder of DraftKings.

What does it signal for US sportsbook margins?

DraftKings is not alone. BetMGM trimmed its 2026 revenue outlook in May, also citing prediction-market competition, and in July FanDuel and DraftKings both quit the American Gaming Association over the same issue. Promotional intensity is the visible symptom of operators defending share against a product they cannot price the same way.

Heavier promotion is not costless for consumers. Free-bet and deposit-match offers carry wagering conditions, and volume arriving through promotions arrives with less scrutiny of who is acquired.

FAQ

Q: Did DraftKings cut its 2026 guidance?
A: No. It maintained the range announced on May 7, 2026 — revenue of $6.5bn to $6.9bn and Adjusted EBITDA of $700m to $900m.

Q: Does a low hold quarter mean the odds were priced badly?
A: Not necessarily. Hold varies with results over short periods, and a quarter in which favourites win more often than expected compresses margin without a pricing error.

Q: How large is DraftKings’ US footprint?
A: Mobile sports betting in 27 states, Washington, D.C. and Puerto Rico, covering about 53% of the US population, plus iGaming in five states covering about 11%.

This article is provided for informational purposes only and is not betting or financial advice.

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