Stifel and Citizens JMP have trimmed adjusted EBITDA forecasts for the two largest US sportsbook operators ahead of DraftKings’ May 7 earnings call, pointing to a 3.3% slide in handle across reporting states and a thinner-than-hoped March Madness margin.
Wall Street is heading into the spring earnings cycle with reduced expectations for DraftKings and Flutter Entertainment, the parent of FanDuel. Stifel and Citizens JMP Securities have cut first-quarter adjusted EBITDA estimates for both companies, citing softer wagering handle, weaker game outcomes during the NCAA tournament and the cost of an aggressive push into prediction markets. DraftKings reports Q1 results on May 7, 2026, and Flutter follows shortly after.
Key Facts:
• US sports betting handle across the 32 publicly reporting states fell 3.3% year-over-year in January and February 2026, versus an 8.7% gain in the same months of 2025 — Stifel research note
• Stifel cut Flutter Entertainment’s fiscal 2026 adjusted EBITDA estimate by 17% and its 2027 estimate by 9% — Stifel
• Citizens JMP analyst Jordan Bender now models Q1 2026 adjusted EBITDA of roughly $154 million for DraftKings, with full-year guidance of $700 million to $900 million still considered reachable — Citizens JMP
• DraftKings expects to spend about $175 million on its prediction markets product in 2026, with the bulk weighted to the second half of the year — DraftKings investor materials
What changed in analyst expectations?
The cuts arrive after a winter that disappointed on two fronts. Reported handle in the 32 US jurisdictions that publish data fell 3.3% year-over-year through January and February, a sharp reversal from the 8.7% rise booked in the comparable period of 2025. Stifel reduced its Flutter Entertainment fiscal 2026 adjusted earnings before interest, tax, depreciation and amortisation estimate by 17%, and trimmed its 2027 number by 9%. Citizens JMP analyst Jordan Bender flagged that “55% and 63% of full-year EBITDA” is now expected to land in the fourth quarter for DraftKings and Flutter respectively — leaving both heavily dependent on a strong NFL and NBA stretch.
Why is US sports betting handle slipping?
Several factors explain the cooling growth curve. The newest US states — Arkansas, where DraftKings and FanDuel went live partway through Q1 — added only an estimated $20 million in incremental adjustments, a fraction of what fresh markets contributed in earlier years. Same-game parlay margins, the engine of recent revenue gains, faced tougher comparisons after a 2024-25 NFL season in which sportsbook hold reached 16%. The NCAA tournament added little relief. “March Madness appeared to be a neutral event from a game outcome perspective,” Bender wrote in an April 1, 2026 client note, with Florida’s early exit and Duke’s Elite Eight loss providing only modest help to operator margins.
Competition is also reshaping the picture. Federally cleared event-contract platforms have begun listing sports outcomes that behave like traditional bets, drawing volume from regulated sportsbooks. DraftKings and FanDuel have responded by launching their own prediction markets in five US states, with a nationwide rollout planned for later in 2026. Both operators are tracking the wider US wagering ecosystem, where alternative real-money formats — including sweepstakes casinos — continue to test state law.
What to watch on May 7
DraftKings’ first-quarter call is the immediate test. CEO Jason Robins has framed prediction markets as “the most exciting ‘growth opportunity'” the company has seen since the 2018 repeal of the Professional and Amateur Sports Protection Act, and CFO Alan Ellingson has indicated material customer-acquisition spending behind the product. Investors will want clarity on three numbers: Q1 adjusted EBITDA versus the new $154 million bar, any change to the full-year $700 million-to-$900 million range, and Q2 handle commentary that captures the FIFA World Cup launch in June. Bender projects roughly $47 million in gaming revenue and about $600 million in handle from the tournament across June and July. Hold trends through April will also matter, given how much recent operator gross gaming revenue hinges on margin rather than volume.
FAQ
Q: When does DraftKings report Q1 2026 earnings?
A: DraftKings is scheduled to report first-quarter 2026 results on May 7, 2026, with Flutter Entertainment expected to follow shortly after.
Q: How much did Stifel cut Flutter’s EBITDA estimates?
A: Stifel reduced Flutter Entertainment’s fiscal 2026 adjusted EBITDA estimate by 17% and its 2027 estimate by 9%, citing softer US handle and weaker March game outcomes.
Q: Are prediction markets eating into sportsbook handle?
A: Federally cleared event-contract platforms have begun listing sports outcomes, and analysts at Citizens JMP and Stifel cite this competition as one of several pressures on traditional US sportsbook handle in early 2026.
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