DraftKings CFO Sees ‘Huge’ Opportunity in Prediction Markets, Strength in Core Biz
Posted on: May 15, 2026, 03:11h.
Last updated on: May 15, 2026, 03:11h.
- CFO Ellingson looks to allay investor concerns about prediction market spending
- He says DraftKings’ core sportsbook business remains solid
- Adds DraftKings Predictions “aligns” with sportsbook side of the company
DraftKings (NASDAQ: DKNG) previously told investors 2026 earnings before interest, taxes, depreciation and amortization (EBITDA) could be trimmed by $200 million to $300 million due to prediction market investments, but CFO Alan Ellingson is looking to allay those concerns.
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 customer overlap between online sportsbooks and platforms such as Kalshi and Polymarket, that overlap could spell opportunity.
As Ellingson points out, many iGaming, prediction market and sports betting customers “have a lot of the same mentality framework,” potentially underscoring the value of DraftKings’ super app, which brings the operators various offerings together under one roof.
“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.”
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