DraftKings, Flutter Earnings Estimates Lowered, Prediction Markets Aren’t Culprit

• Analyst trims DraftKings, Flutter earnings forecasts to Street lows
• NFL outcomes, not prediction markets, cited as reason for downward revisions

Shares of DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT) have been volatile in recent days, with much of the downside in those sports betting stocks blamed on exploding volume on prediction markets and some of those exchanges offering same-game football parlays.

The real problem appears to be another batch of customer-friendly outcomes on NFL games. Due to the arrival of NFL betting, September typically accounts for half of operators’ third-quarter handle, and with the month and the quarter in the books, data indicate DraftKings’ and Flutter’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for the period could suffer.

We estimate FanDuel saw an ~$130 million EBITDA headwind during the month, resulting in +$44 million of total U.S. EBITDA for the quarter (U.S. consensus +$143 million),” observes Citizens Equity Research Analyst Jordan Bender. “DraftKings should see a slightly worse impact (expected gaming margins vs. actual), in our view, with the bad sports results occurring at a time when it leaned into certain promotions and customer acquisition initiatives, resulting in an ~$200 million EBITDA headwind during the month, and overall EBITDA of -$102 million for the quarter (consensus +$51 million).”

Bender slashed his 2025 EBITDA forecast on DraftKings $705.3 million from $871.6 million while cutting his 2026 estimate on the company to $1.29 billion from $1.30 billion. On FanDuel owner Flutter, Bender reduced his 2025 EBITDA outlook to $3.18 billion from $3.32 billion while lowering next year’s estimate to $4.30 billion from $4.37 billion.

DraftKings, Flutter Could Be in for More NFL Choppiness

Over the past week, shares of DraftKings and Flutter are off 16% and 8.82%, respectively, indicating NFL weekends haven’t been profit-generating affairs for the gaming companies.

“The setup from here could prove choppy if gaming margins are volatile, leading to downward estimate revisions during the remainder of the NFL season,” adds Bender. “That said, player prop diversification mix could go the other way for these companies, leading to more upside to margins in ‘good’ weeks, but we have seen very little evidence in the last several NFL seasons that this can work in a positive direction.”

Bender maintains “market outperform” ratings on both stocks, but he lowered his DraftKings price target to $51 from $54 while cutting his Flutter price objective to $340 from $345.

Maybe Some Hope for DraftKings, Flutter

Investors looking for silver linings in the share price declines experienced by DraftKings and Flutter could find some positivity if the companies use those lower prices to repurchase stock, as both have buyback programs in place.

Absent headline risk from prediction markets, we would expect shares for these companies to find a bottom as the companies lean into share buybacks, as online gaming stocks were down 17% (FLUT) and 22% (DKNG) in September, compared to the Russell 3000 at +3%,” notes Bender.

The analyst added that while DraftKings and Flutter trade at discounts relative to long-term potential, the operators must highlight clear strategies in the months ahead or their stocks will remain vulnerable to positive headlines out of the prediction markets space.