DraftKings doesn’t have to beat Kalshi for prediction markets to add $10 billion to its market cap and bring its valuation back to the highs it reached in late August, according to Citizens analysts.
In a note to clients Monday, the Citizens team led by Jordan Bender wrote that the market did not fully appreciate how large an opportunity prediction markets could be for DraftKings, especially when market making was included.
“While the business remains in its early stages, our analysis suggests the opportunity could ultimately be larger than the company’s current market cap,” the note said.
The Citizens team noted that with a 20% market share, DraftKings would still be making close to a billion dollars in revenue, and — if Kalshi’s $22 billion valuation is any indication — its prediction market arm could be worth $10 billion.
“By 2030, we estimate the prediction market opportunity could generate ~$907M of revenue at a 20% market share across its operating states and ~$1.3bn at a 30% share. Applying Kalshi’s implied revenue multiple ($22bn valuation; $2bn of annualized revenue) suggests a 20% market share could be worth ~$10 billion of EV for DraftKings and ~$14bn at a 30% share, similar to the company’s current size,” the note said. “In other words, we do not believe the market is appropriately valuing the opportunity.”
Is DK Predictions revenue multiple similar to Kalshi?
One big question is whether revenue would translate to valuation for DraftKings in the way it has for Kalshi. Kalshi investors often speak of the company’s upside in non-sports prediction markets and with institutional Wall Street funds, which may mean its valuation is a larger multiple of revenue than it would be for DraftKings.
The other important aspect in how revenue might translate to valuation is costs. Kalshi’s expenses are largely unknown, while DraftKings has said it plans to spend between $200 million and $300 million this year on its prediction market offering. Citizens’ team estimated, based on DraftKings’ marketing spend, that the business is targeting between 2 million and 3 million new customers on its prediction market this year.
Although DraftKings’ 2026 guidance has assumed no prediction market revenue, the Citizens team estimated that the business is actually on course for around $28 million in revenue from the product this year.
The note added that the downside risk for this year would actually be a scenario where customer acquisition is better than expected, which could cause marketing spend to be higher in 2026, but will still deliver long-term results.
DraftKings currently routes its prediction market customers to CME and Crypto.com, but it is set to open its in-house exchange, DKeX, soon, after it self-certified its first contracts in May. That should help DraftKings keep a larger share of customer fees for itself.
Market making may be most profitable opportunity
While the exchange itself may have high costs to operate and promote, market making can be profitable more quickly. During DraftKings’ first-quarter earnings call, CEO Jason Robins said the company had started market making and the operation was already profitable.
“Market making is the most attractive layer,” the Citizens note said. “Through our work on this report, we spoke with several market makers to gain insight into fee structures and participation in an industry that could reach 1T contracts traded by 2030. Two key themes emerged. First, market makers are likely to focus on areas where they possess a competitive advantage. For example, sports betting operators, such as DraftKings, are likely to concentrate on sports markets (e.g., parlays and pre-game events) across both internal and third-party exchanges, while crypto-native firms are likely to focus more heavily on crypto-related markets, leveraging existing expertise and proprietary models.
“Second, the economics appear highly attractive. Our discussions suggest that market making offers superior economics relative to nearly every other area within consumer discretionary, providing a compelling and durable runway for growth for DraftKings.”
DraftKings share price
DraftKings shares plunged between late August 2025 and late March 2026, mostly due to the rise of prediction markets. Before the start of football season in 2025, DraftKings shares were valued at $48.78, meaning the business was worth $24.2 billion. By March 30, the shares had fallen as low as $20.46, meaning the company had lost $14 billion from its market value.
Since then, the shares have recovered slightly, due in part to the early performance of DraftKings Predictions. As of 2:30 p.m. Monday, they were trading at $25.90, down 1.9% for the day, valuing DraftKings at $12.9 billion.
