DraftKings Stock Falls to Three-Year Low Amid Sector Selloff
DraftKings shares fell as low as $18.58 on Thursday, October 1, after closing the prior session at $19 — its lowest close since April 2023 — as the stock continues a slide that has now erased roughly half its value over the past year. The decline was part of a broader selloff across publicly traded sports betting operators, with longtime rival FanDuel's parent, Flutter Entertainment, also falling to a record low in the same week.
A mix of pressures, not one single cause
The drop reflects several pressures landing at once rather than a single piece of news. DraftKings recently missed Wall Street revenue estimates and reported a $67.6 million net loss for the period, compared with a $157.9 million profit a year earlier, with the shortfall tied largely to bettor-friendly results and higher promotional spending. At the same time, the company faces growing competition from prediction-market platforms such as Kalshi and Polymarket, and continued scrutiny over how it uses customer data and artificial intelligence.
Despite the stock's slide, DraftKings has maintained that its core sportsbook business remains on track to generate roughly $1 billion in adjusted EBITDA this year, and CEO Jason Robins has said handle grew strongly in September. Robins has also argued that market reaction to the stock often tracks prediction-market headlines more than the sportsbook's underlying performance, telling an industry conference last month that positive predictions news tends to push DraftKings shares down, while negative predictions headlines, like adverse court rulings, can push the stock up.
Betting big on prediction markets
DraftKings launched its own prediction-market exchange, DKeX, in June to reduce reliance on third-party platforms, and plans to spend an additional $200 million to $300 million this year building out the category. The company says it was approaching a double-digit share of sports prediction-market trading volume after nearly fivefold growth in volume between April and July. Independent estimates from analyst firm Needham tell a different story for the NFL season's opening week specifically, crediting Kalshi with roughly 76% of sports prediction-market volume during that stretch against about 3% for DKeX, excluding trades routed through other exchanges.
Legal scrutiny adds to the pressure
The selloff also comes amid continued fallout from a September New York Times investigation alleging DraftKings used artificial intelligence to target promotions toward customers likely to lose money, while not deploying comparable technology to flag problem gambling. DraftKings has disputed the findings and denied making its products more addictive. The Massachusetts Gaming Commission has since begun reviewing how DraftKings and other operators use AI in their marketing, and a proposed class-action lawsuit was filed Wednesday in Massachusetts federal court seeking relief on behalf of customers the suit alleges were targeted through that technology.
Why it matters
For bettors, the stock's slide doesn't change the odds, promotions, or product available on the DraftKings app in any given state — it's a market reaction to financial results, competitive pressure, and legal exposure, not a signal about the sportsbook's day-to-day operation. But it is a useful marker of how unsettled the US sports betting sector's economics have become as prediction markets pull handle away from traditional books even as regulators scrutinize both industries more closely. It's also a reminder that the fastest-growing part of an operator's business, here prediction markets, can be an expensive bet before it's a profitable one.