DraftKings just posted blowout earnings. So why did the stock crater?

For investors, DraftKings has been anything but a sure bet.

The company reported earnings on Thursday, which showed revenue of nearly $2 billion—an increase of 43% year-over-year—and earnings per share of $0.25. “We closed 2025 on a high note. Fourth quarter revenue increased 43% year-over-year and we achieved records for revenue and Adjusted EBITDA. Our core business is strong as we enter 2026,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder, in a statement included with the earnings release.

However, despite the strong numbers, DraftKings’ stock was down more than 15% during pre-trading on Friday morning, and is now down almost 30% since the beginning of the year. Further, over the past calendar year, it’s down more than 45%.

The catalyst? Future uncertainty. Specifically, the company is forecasting “fiscal year 2026 revenue guidance range of $6.5 billion to $6.9 billion and a fiscal year 2026 Adjusted EBITDA guidance range of $700 million to $900 million,” which is below estimates and softer than anticipated. 

The broader issue is that the sports gambling and prediction markets are evolving quickly, and there’s the distinct possibility that regulation could rein things in, or that individual states could start to tax the companies or users themselves to different degrees.

Further, prediction market companies like Kalshi and Polymarket are now in the fray, and both of those companies may offer users a different way to scratch their itch by offering betting products that are exempt from state taxes due to the way they’re structured. DraftKings, too, has a predictions app (DraftKings Predictions) available to users in 38 states, while its sports betting app is available in 28 states.

DraftKings isn’t alone in taking it on the chin from the markets. Flutter Entertainment, the largest sports betting stock by market cap, and parent company of FanDuel and others, was likewise down more than 4% before the market opened on Friday, and down more than 35% year-to-date. MGM, which also runs a betting app, was down by similar amount, as was Caesars.

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