There is only a 1% overlap between customers of DraftKings’ sportsbook and Kalshi, and instead the vast majority of prediction market volume in states with legal sportsbooks come from “professional betting syndicates and institutional traders,” according to DraftKings CEO Jason Robins.
Robins revealed the findings in a letter to shareholders following DraftKings’ second-quarter results Thursday.
Sports revenue for the operator declined by 11.7% to $891.9 million, but Robins said that cannibalization from prediction markets was not the culprit, echoing Flutter CEO Peter Jackson’s view. Robins cited research based on deposit data including debit and credit transactions from analytics firm Carbon Arc, which found almost no overlap between DraftKings users and users of “the largest prediction market operator,” which is Kalshi. He said that in states where sportsbooks are available, the vast majority of prediction market users are professional bettors or institutions, who would not be considered part of DraftKings’ core customer base.
“We continue to see only about 1% customer overlap between our sportsbook and the largest prediction market operator in sportsbook states,” he wrote. “Based on internal analysis, we estimate that 80% to 90% of prediction market consumer volume in sportsbook states comes from professional betting syndicates and institutional traders, which is volume that mostly would not have been on Sportsbooks to begin with.”
According to a footnote, the analysis “reflects a company estimate based on internal analysis of the company’s historical wagering activity and prediction markets consumer volume in Sportsbook states.”
Predictions monthly volume nears $1bn
Robins also revealed further information on the performance of DraftKings Predictions. In July, annualized total volume on the platform rose to $11 billion, suggesting volume within the month itself was just under $1 billion. That is an almost 600% increase since April, but still a long way behind Kalshi, which traded more than $40 billion during the month.
Robins also said that DraftKings was market making on three exchanges, though did not say which. DraftKings launched its own in-house exchange in early June, though most trades on DraftKings Predictions still go through Crypto.com.
Robins added that he believed that “over the next several years,” DraftKings would be able to get the same lifetime value from its prediction market customers that it does from its sportsbook customers. A major part of the reason why, he said, was due to the fact that DraftKings owns a market maker, an FCM that directs customers to exchanges, and an exchange itself. The CFTC has proposed rules that could limit the extent to which a market maker owned by a company that also owns the exchange it trades on can aim to make profits, but Robins did not appear deterred by those rules.
“As DKeX grows, it will create more opportunities for our market maker, while deeper and more diverse liquidity will make our own offering more attractive to customers,” Robins wrote in the letter. “This is a core differentiator that will provide a meaningful LTV advantage versus our competitors.”
“While revenue per customer may be lower than our sportsbook offering, the higher-margin profile of the business supports a similar level of gross profit per customer over time,” Robins wrote.
DraftKings reports $67 million loss
The results also showed DraftKings made a $67.6 million loss during the second quarter. Adjusted earnings before interest, tax, depreciation, and amortization declined to $115 million.
DraftKings shares dipped a little in after-market trading after the results announcement, down 1.6% to $21.81. That is down more than 50% over the past year.
“Our core business remains on track to generate approximately $1 billion of Adjusted EBITDA this year, providing us with financial flexibility to invest behind the significant opportunity that we are seeing in Predictions,” said DraftKings’ Chief Financial Officer Alan Ellingson. “Therefore, we are maintaining our fiscal year 2026 guidance for revenue of $6.5 billion to $6.9 billion and Adjusted EBITDA of $700 million to $900 million.”
