DraftKings to report Q1 earnings with 1 key threat looming

DraftKings Inc. (DKNG) is set to report first-quarter earnings after markets close Thursday, with investors focused on the emerging threat of prediction markets to its core sports-betting business.

"The path to profitability remains our key focus," a company spokesperson said.

Wall Street analysts expect the company to post adjusted earnings per share of $0.22 on revenue of $1.63 billion for the first quarter of 2026. The stock has fallen 30 percent since the start of the year, though it traded up nearly four percent to around $25 a share ahead of the report. Analysts maintain an overweight rating on the stock with an average price target of $34.04, according to FactSet data.

The earnings release will provide the first detailed look into DraftKings' strategy for competing with prediction market platforms like Kalshi and Polymarket. These firms offer event contracts that can function like sports wagers but operate outside of state-by-state gambling regulations, creating a significant competitive challenge.

Rival's Mixed Results

The report comes just a day after rival Flutter Entertainment, parent of FanDuel, reported a 6 percent year-over-year revenue increase in its US business to $1.14 billion, driven by a 19 percent jump in iGaming revenue. However, FanDuel's sports betting handle saw a 9 percent decline, a potential warning sign for the sector that investors will be watching closely in DraftKings' results.

Flutter also announced that FanDuel CEO Amy Howe is stepping down and that the company has begun market-making on third-party prediction market platforms to compete directly. DraftKings has been market-making on its own internal platform, DraftKings Predictions, and today's report will offer insight into its performance.

The Cannibalization Question

A key question for investors is the risk of customer cannibalization. Betting firms generate higher margins from customers on their traditional, regulated sportsbooks. The extent to which users might migrate to lower-margin prediction market products remains a primary uncertainty.

The guidance provided by management for the second quarter and the full year will be critical for the stock's direction. Investors will be listening for commentary on the earnings call scheduled for after the release, seeking clarity on the financial impact of prediction markets and the company's strategy to defend its market share.

This article is for informational purposes only and does not constitute investment advice.