DraftKings’ Q3 earnings report last week marked a turning point for the business, with confirmation of sports event contracts on DraftKings Predictions a definitive marker for a new era. Plans to launch in non-sports states are in the offing, with 2025 guidance now including contributions from the product.
On the financial front, revenue hit $1.1bn (£836m), down 4% year on year, with customer-friendly results having an impact. Still, bosses are bullish. In fact, CEO Jason Robins said it was “the most bullish I have ever felt about our future”.
Here, EGR unpacks the firm’s latest earnings reports, with insights on the ESPN deal, the Railbird acquisition and AI investment plans.
Who could have predicted it?
DraftKings will soon launch sports event contracts via its DraftKings Predictions in US states where the operator does not offer sports betting, in what was the headline story from the group’s earnings.
Robins insisted the business, which will launch via the acquisition of Commodity Futures Trading Commission-licensed Railbird, would compete and win against the incumbents, and emerge as a leading light as it did in the online sports betting race.
Robins said: “Our capabilities are superior when it comes to customer acquisition, product development, regulatory compliance, responsible engagement and the many other critical factors it will take to win in the space.”
DraftKings’ 10-Q report included details on its acquisition of Railbird, which completed on 21 October. DraftKings paid an upfront $48.6m in cash and stock for the business, which has yet to go live with its own product. The upfront fee consisted of around $19.9m in cash and 900,000 shares of Class A common stocks valued at $28.7m.
DraftKings noted that additional consideration of up to $200m – in a combination of shares and cash based on performance metrics – was included in the deal.
The CEO added that DraftKings would take a “thoughtful” approach to be “respectful of other stakeholders”, including tribes and regulators across the US.
Robins also noted that legislatures across the US are “absolutely aware” of prediction markets, with pressure building from the product’s popularity potentially forcing the progress of online sports betting bills.
He added: “I think this is an opportunity for us to go into the industry and compete and win. But I also think it’s a powerful lever in terms of what policymakers are going to be thinking. They’re still developing views on it.”
Rock the Kalish-bah
Nestled in the Boston-based giant’s 10-Q report, the operator confirmed that company co-founder and current DraftKings North America president Matt Kalish would step down from his role on 31 March 2026.
The planned transition will see Kalish remains as a board member. DraftKings and Kalish mutually agreed on the transition on 6 November.
Kalish, one of the three co-founders alongside Robins and Paul Liberman, initially served as chief revenue officer before becoming North America president in 2020.
DraftKings did note that some of his stock options would vest on an accelerated basis, while others would continue at the existing rate.
There were no details given on Kalish’s replacement.
Hola, me llamo DraftKings
DraftKings is also set to roll out its Spanish-language app, with Robins citing next summer’s FIFA World Cup as a key driver of development for the product. Reports this summer suggested the app would be launching soon, with Spanish being the second-most spoken language in the US.
As part of the operator’s new multi-year deal with NBCUniversal, it will be granted advertising spots across Telemundo’s coverage of the tournament next year, which is due to be hosted in the US, Canada and Mexico. Telemundo is one of the US’ largest Spanish-language TV stations.
On the analyst call, Robins said: “I’m sure some [Spanish-speaking customers] are already betting, but how many of them are going to make their choice of where they go based on the experience in the Spanish language?
“I have to imagine there’s a lot of people who would prefer a Spanish-language app, maybe even some who just won’t use an English-language app.
“If we can create the best experience, especially with a big event like the World Cup coming up, it gives us an opportunity to really build outsized share in that demographic.”
Robins added that California and Texas, where there are large Spanish-speaking populations, represented an “incremental opportunity” in the future.
Remember belt tightening? He’s back… in AI form!
With DraftKings Predictions now firmly in the launch pipeline, and the subsequent investment and marketing dollars needed to back the venture, DraftKings’ core online sports betting and igaming business will still be ticking along. And that ticking along needs investment. But Robins stated that states the business had been operational in for “at least a few years”, more than likely pre-2022, could see investment tapered.
That investment will remain for new state launches, with Missouri due to go live on 1 December, but savings are planned, with AI driving them at the forefront.
Robins said: “Online sports betting and igaming products and the states that we have been in for at least a few years, I don’t think you’re going to see much, if any, incremental investment. In fact, we might actually see a little bit of a reduction in promotion and marketing.
“I think AI will be a two-way thing. There will be some places where we’re actually able to reduce costs next year, but there will also be some incremental investment, which has a longer tail on where we see the efficiency and revenue generation impacts.
“I think that’s an area that we need to be investing in and could potentially have a very significant impact on both our cost structure and revenue trajectory in 2026 and beyond.”
Robins previously indicated an effective hiring freeze was in place at DraftKings, bar AI engineers, as he encouraged staff to deploy agentic AI across the group.
New relations
Last week saw the big, albeit not totally unexpected news, that ESPN and PENN Entertainment had terminated their agreement to operate ESPN Bet, with PENN instead rolling out theScore Bet across the US. In turn, ESPN announced DraftKings would serve as the media giant’s official sportsbook and odds provider, effective from 1 December.
While the partnership will not be as deeply intertwined as PENN’s, DraftKings will be integrated to ESPN platforms, including providing content for the betting tab within the ESPN app. Additionally, ESPN users will be able to access DraftKings’ sportsbook, DFS and Pick6. A full rollout of all integrations is expected in 2026.
Robins added: “They have a fantasy database and app that is as big as anything in the world in that category. They just have so many different channels and brands and also great talent. It’s going to be something that we leverage across all elements of what we do from the product to our marketing.
“I think having somebody that can not only help advertise as a partner and help bring in new customers but can truly help you engage your existing customers, with their content and things that can potentially be integrated, I think that can take this to a whole new level.”
The post Five things we learned from DraftKings Q3 earnings report first appeared on EGR Intel.
News editor Joe Levy picks out key insights from the operator’s latest reports, including the price it paid for Railbird and North America president Matt Kalish’s departure date
The post Five things we learned from DraftKings Q3 earnings report first appeared on EGR Intel.