DraftKings CFO Sees ‘Huge’ Opportunity in Prediction Markets, Strength in Core Biz

• CFO Ellingson downplayed investor anxiety over the costs of entering the prediction market space
• DraftKings reassures the market that its primary sportsbook business continues to show sustained strength
• The executive highlighted that DraftKings Predictions is designed to directly support and integrate with its core betting operations

DraftKings (NASDAQ: DKNG) CFO Alan Ellingson is looking to calm investor jitters after the company revealed that its push into prediction markets could shave up to $300 million off its 2026 adjusted EBITDA projections.

Speaking at MoffettNathanson’s Media, Internet & Communications Conference on Thursday, the DraftKings financial boss said the company’s core sportsbook business is in “fantastic” shape while describing the prediction market opportunity as “huge.”

The Boston-based gaming company launched DraftKings Predictions last December .

So, we see Predictions as a monstrous opportunity as a great way for us to leverage experience that we already have, understanding the concerns and the skepticism of the investment community as we are engaging and building up our product to be the best,” said Ellingson in a fireside chat with MoffettNathanson analyst Robert Fishman. “But we see it as the next evolution of DraftKings, and we’re excited to see what it comes out of it.”

Broadly speaking, the investment community views DraftKings as an iGaming/sports betting stock, but there’s increasing belief that DraftKings Predictions can drive long-term growth while complementing the operator’s existing suite of wagering options.

DraftKings Super App Boosts Prediction Market Offering

While some analysts expressed concern about the potential customer overlap between online sportsbooks and platforms such as Kalshi and Polymarket, that overlap could spell opportunity.

“So, there’s a lot of value overlap there. It also means, though, that our national advertising, for example, can go even further because we’re bringing people towards a singular app,” said the DraftKings CFO.

Though he didn’t get into specifics, Ellingson mentioned California as a jurisdiction in which the super app is adding value.

The Golden State, the most populous in the US, doesn’t allow sports wagering, meaning the DraftKings app was previously of little use to bettors there. However, with prediction markets legal there, at least for now, DraftKings’ super app can serve as a California customer acquisition tool.

“As the product evolves and our markets all start to evolve on the prediction side, suddenly, you start to see a product that is so similar to what the Sportsbook is offering that it’s basically indistinguishable whether you’re in California, you’re doing prediction markets or you’re in New York and you’re doing sports betting, you can get the same customer experience,” observes Ellingson.

Prediction Market Margins Could Impress

DraftKings is already revealing encouraging details regarding its prediction markets efforts, including driving customer acquisition costs and the potential for market making to be a significant long-term revenue growth driver.

Looked at another way, DraftKings Predictions has the potential to be higher margin business than the sportsbook side of the company. The possibility of margin expansion over time could allay investors near-term concerns about related spending.

“Prediction markets themselves are a higher-margin product. They don’t quite have the same overhead that sportsbooks or casinos have,” said Ellingson. “There’s definitely opportunities if we mix heavier into prediction markets for great margin expansion coming from that.”