DraftKings (DKNG) Q4 2025 Earnings Call Transcript

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Date

Friday, Feb. 13, 2026 at 8:30 a.m. ET

Call participants

• Chief Executive Officer — Jason Robins
• Chief Financial Officer — Alan Ellingson

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Takeaways

• Revenue -- nearly $2 billion for the quarter, representing 43% year-over-year growth.
• Adjusted EBITDA -- $343 million for the quarter, four times the prior year, with adjusted EBITDA margin up over 1,000 basis points to 17%.
• Share repurchases -- 8 million shares repurchased in the quarter and 16 million during the year.
• Full-year revenue -- above $6 billion, up 27% year over year.
• Full-year adjusted EBITDA -- Over $600 million, more than tripling the prior year and surpassing guidance.
• Positive net income -- First-time achievement of positive GAAP net income for the full year.
• Sportsbook revenue -- $1.4 billion in the quarter, a 64% increase year over year.
• Sportsbook handle -- $54 billion for the year, up 11% year over year with Q4 handle growth accelerating to 13%.
• Sportsbook net revenue margin -- Q4 increased 250 basis points to 8%, with parlay handle mix up nearly 500 basis points.
• Parlay growth -- January parlay handle mix up 300 basis points year over year.
• iGaming revenue -- Increased 20% year over year.
• Fantasy revenue -- Benefited from the scaling of Pick Six.
• Lottery revenue -- Supported by expanded Scratcher and Keno offerings alongside stronger jackpots.
• 2026 guidance -- Projected revenue between $6.5 billion-$6.9 billion; adjusted EBITDA between $700 million-$900 million.
• Predictions vertical -- No revenue included in 2026 guidance; significant customer acquisition spend planned.
• Market opportunity -- Analyst estimates for predictions gross revenue opportunity cited at $10 billion, with figures up to $16 billion also referenced.
• Regulatory environment -- CEO Robins said, "The CFTC Chair recently directed agency staff to establish clear standards for event contracts to provide certainty for market participants."
• Railbird integration -- Planned for mid-year to enhance innovation and customer economics in predictions.
• Sportsbook net revenue margin -- Over the last four months, exceeded 9%, about 40% higher than the January–October 2025 average of 6.5%.
• Sportsbook hold -- Fourth-quarter overall hold slightly above 12%; 2025–2026 NFL season hold at 16%.
• Open wager payouts -- Capital at risk was $2.5 trillion, attributed to parlays' multiplicative effects.
• Investor Day -- Announced for March 2, with more detail on the predictions strategy and business model.

Summary

DraftKings (NASDAQ:DKNG) reported record revenue and adjusted EBITDA for both the fourth quarter and full year, achieving positive GAAP net income for the first time. Sportsbook segment growth was led by significant year-over-year increases in both revenue and handle, with net revenue margins expanding due to higher parlay mix and favorable sporting outcomes. Management confirmed 2026 guidance that reflects projected investments in the emerging predictions category, while explicitly excluding any revenue contribution from this vertical in the current outlook. The call highlighted an improving regulatory landscape for predictions, integration milestones such as the upcoming Railbird launch, and the central role of technology and existing national marketing relationships in scaling both core and new business lines.

• CEO Robins disclosed, "Well, first of all, we have been excited about predictions for a while. I think you are right. We are more excited; I would not say it is a change of tone as much as an acceleration of our excitement. I think part of it is there has been a real lean-in from the CFTC. What went from sort of a hands-off, we are not going to comment posture from the previous interim Chair is now, you know, a full-fledged affirmation that this is something that the CFTC considers to be firmly under their jurisdiction, they intend to defend in the courts, and they are going to issue real guidelines and regulations," directly tying regulatory progress to the acceleration of investment.
• DraftKings plans to repurpose substantial national marketing spending to promote the predictions vertical, expecting synergy with existing customer acquisition strategies.
• No material cannibalization from predictions was identified in core Sportsbook metrics, with leadership stating, "we are not seeing a discernible impact from predictions on our revenue."
• DraftKings continued share repurchases throughout the year, repurchasing 16 million shares during the fiscal year.
• DraftKings expects to discuss its approach to market making and combination trading options at the upcoming Investor Day, emphasizing proprietary technological advantages.
• Older state cohorts continue to show both high customer retention and increased monetization via higher parlay mix and promotional efficiency, aided by recent AI-driven tools.
• The competitive environment for promotions across core and prediction businesses remains described as "rational," with management embedding conservative assumptions into guidance to account for future changes.

Industry glossary

• Handle: The total monetary amount wagered by customers over a given period.
• Parlay: A bet that links two or more wagers, increasing payout but requiring all selections to win.
• Hold: The percentage of total wagers retained by the operator after payouts.
• Predictions: DraftKings' prediction markets and fantasy-style trading products, a distinct vertical from traditional sports betting.
• Market making: Providing liquidity to prediction or betting exchanges by continuously offering buy and sell prices, often managed in-house to enhance user experience and profitability.
• Capital at risk: The maximum potential payout DraftKings could owe if outstanding wagers all resolve in favor of customers.
• CFTC: Commodity Futures Trading Commission, the federal agency overseeing certain event contract and prediction market activity.
• Pick Six: A DraftKings fantasy sports format driving incremental fantasy revenue.
• Railbird: An exchange platform being integrated by DraftKings in 2026 to support its predictions business and liquidity capabilities.
• OSB: Online Sports Betting, legal in select U.S. states and the mainstay of DraftKings' sportsbook business.
• MUP: Monthly Unique Players, the count of distinct active customers in a given month.

Full Conference Call Transcript

Jason Robins, Co-Founder and Chief Executive Officer of DraftKings Inc., who will share some opening remarks and an update on our business. Following Jason's remarks, our Chief Financial Officer, Alan Ellingson, will provide a brief review of our financials. We will then open the line to questions. I will now turn the call over to Jason Robins. Thank you, Mike. We closed 2025 on a high note, setting new quarterly records for revenue and adjusted EBITDA. Fourth quarter revenue grew 43% year over year to nearly $2,000,000,000. Adjusted EBITDA was $343,000,000, 4x the prior year period. Adjusted EBITDA margin expanded by more than 1,000 basis points year over year to 17%.

We repurchased another 8,000,000 shares during the quarter, and we expect to remain with repurchases as our adjusted EBITDA continues to grow. We are in a strong position. Our sustainable advantages in product, technology, trust, and marketing continue to drive higher LTV and efficient customer acquisition. AI and machine learning amplify each one by making our products better, our platform faster, consumer trust stronger, and marketing more efficient. The result is predictable and improving cohort economics, reinforcing our conviction that we have built an efficient and powerful long-term business model. We are excited to share more details at our virtual Investor Day on March 2. Now we take our next step.

Predictions is rapidly developing into a massive incremental opportunity, and we are moving with urgency. We expect to emerge as the leader in this nascent category. We plan to deploy growth capital to build the best customer experience in predictions and acquire millions of customers. This year, we anticipate significant step-function improvements to our predictions, including the integration of Railbird and launch for our Market Making division. We are targeting hundreds of millions in annual revenue for DraftKings Inc. predictions in the years ahead. We believe there is much more upside over the long term. This should translate to meaningful incremental adjusted EBITDA. In predictions, we have the playbook to execute and win.

Before I go deeper on predictions, I want to highlight the strength of our core business. In fiscal year 2025, we grew revenue 27% year over year to above $6,000,000,000. Adjusted EBITDA more than tripled to over $600,000,000 and exceeded the high end of the guidance range we provided in November. We reported positive net income for the first time and repurchased 16,000,000 shares during the fiscal year. The business is scaling in a durable way. Since fiscal year 2022, we have grown customers by nearly 6,000,000, revenue by roughly $4,000,000,000, and adjusted EBITDA by more than $1,000,000,000. Every year has been better than the last because our LTV flywheel continues to improve,

Jason Robins: powered by our sustainable advantages. We expect our revenue and adjusted EBITDA to grow for many years to come. I also want to directly address the most common question we are getting. Could a growing predictions category overlap with Sportsbook over time? To date, we are not seeing a discernible impact from predictions on our revenue. In our newest Sportsbook state, Missouri, adoption of our offering was higher than in any other state launch in our history through the first two months, and activity per customer has been strong. In the fourth quarter, our overall Sportsbook handle accelerated to 13% year over year.

In January, our Sportsbook handle increased 4% year over year, even after two consecutive months of Sportsbook-friendly outcomes and as our parlay handle mix continued to surge. Internal and third-party data suggest predictions impacted our January handle only very slightly, and primarily impacted low-margin customers. Consequently, the impact to our revenue has been de minimis. Now I would like to focus on predictions. We have been building DraftKings Inc. for more than fourteen years. A new growth lane opens, we move fast and execute at scale. Predictions is the most exciting new growth opportunity we have seen since PASPA struck down in 2018. Early signals are strong.

On Super Bowl Sunday, DraftKings Inc. predictions had the second most downloads in its category and delivered three times its prior record for daily trading volume. Customer retention is also strong so far, even with a product that is early and positioned to improve rapidly as we add content. In predictions, speed and execution, combined with a strong brand, smooth interface, and real sports modeling, trading, and technology expertise will determine long-term leadership. This is where DraftKings Inc. thrives.

Michael DeLalio: The opportunity here could be large.

Jason Robins: Based on analyst estimates, predictions could represent a $10,000,000,000 annual gross revenue opportunity in the years ahead. We expect to capture it across multiple business lines, including customer-facing platform, our own exchange, and market making. We expect the volume on DraftKings Inc. predictions to keep building, growth accelerating through 2026 and beyond. Our goal is simple, we intend to lead the predictions category.

Operator: As

Jason Robins: such, we support the CFTC's engagement on events, and the advancement of a more refined and durable regulatory framework. The CFTC Chair recently directed agency staff to establish clear standards for event contracts to provide certainty for market participants. We view this direction as constructive. Tighter rules should reward operators with strong compliance and responsible engagement infrastructure, and support the expansion of sports-related predictions over time. We bring sports, trading, and technology together at scale backed by strong distribution. We originate prices and manage risk every day in our Sportsbook. We have hundreds of data scientists and machine learning engineers building sports models, plus a dedicated trading desk that fine-tunes live pricing in real time.

We combine that with a trusted brand, a large customer database we can activate efficiently, and marketing relationships like ESPN and NBCUniversal that give us flexible, high-intent inventory to deploy as returns dictate. We have run this playbook before. In Fantasy, Sportsbook, iGaming, and Lottery, we built leadership positions by steadily bringing critical technology in-house. In Sportsbook, we successfully integrated acquisitions and continued investing deeply in our proprietary technology to deliver the number one rated product. Our Sportsbook product is far ahead of our peers in uptime, which is the percentage of a game during which odds are available. Predictions is the next chapter of this same strategy. We have already designed our product to improve rapidly.

Our product is built to scale; DraftKings Inc. predictions already connects to multiple exchanges, we can stay nimble as trading options evolve and continuously expand content availability and liquidity. Our recent Crypto.com integration was an immediate upgrade in breadth and engagement, adding new trading options across categories such as player performance markets, golf, UFC, and politics. Next, we plan to integrate Railbird near the middle of this year to improve innovation velocity and strengthen customer economics by owning more of the stack. We are also launching market making because liquidity is a core part of customer experience in predictions. Contract listings, fees, market structure, and distribution matter, but tight two-way markets with depth are what attract participants.

Exchanges seed liquidity by incentivizing market makers, and DraftKings Inc. can lead market making for sports contracts because we model sports probabilities exceptionally well, and we have the infrastructure to provide liquidity across a broad spectrum of contracts. This creates two revenue engines for DraftKings Inc. and predictions. First, transaction fees, as we own the customer relationship through DraftKings Inc. predictions and offer a platform to trade across sports and non-sports. Second, trading economics for market making and proprietary trading on our own exchange and where it makes sense on other exchanges. Over time, we also intend to introduce exclusive combination trading options that may become a major differentiator as the customer's experience evolves.

I will now turn the call over to our Chief Financial Officer, Alan Ellingson, to discuss our results and guidance.

Alan Ellingson: Thank you, Jason. Before I cover our fiscal year 2026 guidance, I would like to discuss our 2025 financial performance starting with the fourth quarter. Please note that all income statement measures discussed, except for revenue, are on a non-GAAP adjusted EBITDA basis. Our fourth quarter revenue grew 43% year over year to nearly $2,000,000,000. Adjusted EBITDA was $343,000,000, four times the prior year period. Adjusted EBITDA margins expanded by more than 1,000 basis points year over year to 17%. We repurchased another 8,000,000 shares during the quarter, and we expect to remain active with share repurchases as our adjusted EBITDA continues to grow. Results were strong across all our verticals in fiscal year 2025.

Fantasy revenue increased as Pick Six has begun to scale. Year over year, Sportsbook revenue increased over 30%, while Sportsbook net revenue margin expanded by more than 100 basis points. iGaming revenue increased 20% as we expanded our offering and attracted a broader demographic. Lottery revenue benefited from a stronger jackpot environment, as well as rolling out Scratcher games and Keno in additional states. And we delivered all this while launching our fifth vertical, predictions. Sportsbook had a standout fourth quarter. Revenue increased 64% year over year to $1,400,000,000. Handle growth accelerated for the second consecutive quarter to 13% year over year. Sportsbook net revenue margin increased 250 basis points to 8%. Parlay handle mix increased nearly 500 basis points.

This continues the multiyear trend that is driving our structural net revenue margin higher. Sport outcomes were Sportsbook-friendly in the fourth quarter, and our overall hold was slightly above 12%. As many of you are aware, variance is random in nature in the short term and can either be a tailwind or a headwind for our business. For the 2025 to 2026 NFL season, our NFL hold percentage was 16%. I would also like to touch on the scale of our Sportsbook business for the fiscal year 2025. Our Sportsbook handle increased 11% year over year to $54,000,000,000. Our total potential payouts across all open wagers, or capital at risk, was $2,500,000,000,000 due to the multiplicative nature of parlays.

We achieved this scale even though our Sportsbook is only available to about half the U.S. population. As a result of our strong fourth quarter, we had an excellent year. We grew revenue 27% year over year to above $6,000,000,000. Our adjusted EBITDA more than tripled to over $600,000,000 and also exceeded the high end of the guidance range that we provided in November 2025. We repurchased 16,000,000 shares during the fiscal year. We also reported positive GAAP net income for the first time. I am particularly proud of that last fact, that we generated positive net income for the fiscal year 2025, as it demonstrates how efficient and powerful our business model is becoming.

As Jason mentioned, we expect to share more about the strength of our business model and our sustainable advantages at our virtual Investor Day on March 2. Now I would like to touch on our fiscal year 2026 guidance. We are excited about both our results and our business trajectory. In fiscal year 2026, we expect DraftKings Inc. to achieve between $6,500,000,000 and $6,900,000,000 of revenue, and between $700,000,000 and $900,000,000 of adjusted EBITDA. Our revenue and adjusted EBITDA guidance ranges reflect expected investments in DraftKings Inc. predictions, line-of-sight jurisdiction launches, and disciplined planning as business conditions evolve. We assume state tax rates will remain consistent with where they are today.

That concludes our remarks, and we will now open the line for questions.

Operator: Thank you. Star 11 on your telephone, and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Daniel Brian Politzer from JPMorgan.

Jason Robins: Hey, good morning, everyone. Thanks for the question.

Michael DeLalio: I was hoping we could kick things off talking about prediction markets. Jason, the tone of your letter and comments certainly reflect the pivot in how you are thinking about this.

Jason Robins: With you. I think going so far as to say that this is the most exciting growth opportunity since PASPA, but

Michael DeLalio: I guess the question is why are you so much more aggressively leaning into prediction markets now? What have you seen in the past few months, either from a regulatory backdrop, broad social acceptance, or recent rollout of DraftKings Inc. predicts, that gives you the confidence that this investment makes sense? And perhaps most importantly, how are you thinking about the level of investment

Jason Robins: for 2026 given some of your peers have talked about $200 to $300,000,000 there? Thanks. Well, first of all, we have been excited about predictions for a while. I think you are right. We are more excited; I would not say it is a change of tone as much as an acceleration of our excitement. I think part of it is there has been a real lean-in from the CFTC.

What went from sort of a hands-off, we are not going to comment posture from the previous interim Chair is now, you know, a full-fledged affirmation that this is something that the CFTC considers to be firmly under their jurisdiction, they intend to defend in the courts, and they are going to issue real guidelines and regulations. So anything that creates a stable regulatory environment that allows us to operate more freely is a great upside thing for us.

And then you combine that with what we are seeing in our early numbers and what we are seeing in the broader numbers from some of the others in the market, and it is clear that there is a lot of growth potential here. I have seen analysts' estimates as high as $16,000,000,000. We centered around 10, which is kind of the average of a bunch, and some back-of-the-envelope math we were doing as well, but it is clearly a huge opportunity. We are incredibly well positioned, and I think the biggest thing that was sort of holding us back, if you will, before was the regulatory uncertainty, and that has since been cleared up.

So, you know, with that, I think really, really excited, and combine that with what we are seeing in the numbers, and I think it is going to be a big year. As far as the investment level, one of the great things for us is we already have a lot of what we need. We have the pricing models. We have the marketing. Yes, we will probably spend some incremental marketing, but we can repurpose a lot of our marketing. We have a ton of national spend targeting the sports customer already, so it is a ton of synergy there. I think it is a huge advantage for us that we can do that.

Michael DeLalio: Got it. Thanks. And then just for my follow-up, in terms of the guidance

Jason Robins: obviously, there is an implied deceleration in revenues. I think it is around 11% in 2026.

Michael DeLalio: You maybe just give us the building blocks there for how you are thinking about sports betting within that? And then certainly, handle, that has been a focus. You mentioned January was up 4%.

Jason Robins: But in terms of just the building blocks for sports and kind of that broader revenue growth guide for 2026 would be helpful.

Michael DeLalio: Yeah. I just want to start a little bit on philosophy. So

Jason Robins: first several years we were public, we were very conservative with our guidance. We consistently were beating and raising, and we kind of got away from that a little bit. Look at 2023. At the beginning of 2023, we guided to what all of you thought was a disappointing number. We got killed. I think we were down, like, 16% on the day. And then we proceeded to beat and raise every quarter for the rest of the year and got it back and then some, ended up, I think, about $300,000,000 better on the EBITDA side, adjusted EBITDA side, from what we originally guided. So I like that playbook a lot better, and we got away from that.

I thought we had a good year last year, so it is very frustrating to me that we missed our guide. That was the self-inflicted wound that we did that. We ended up growing our adjusted EBITDA by $440,000,000. We had a great revenue growth year at 27%. How we could do that and miss a guide is just shame on us. Right? So I think we really went back the other way. We said, let us make sure we put something out there that we feel really good about. It kind of went like this: my team came in and showed me a number and said we can hit this. And I said, no. Go make it lower.

They went back, and they said, okay. Now really, like, we are sure we can hit this. And I said, I do not care. Make it lower again. And that is what we got. But, you know, for me, missing numbers again is just not acceptable, and so it is not something we are willing to do. Thanks. I appreciate all the candor.

Operator: Thank you. One moment for our next question. Our next question comes from the line of David Brian Katz from Jefferies.

Michael DeLalio: Good morning. Thanks for taking my question. Along that same vein as the follow-up, I appreciate the conservatism and the candor there.

Jason Robins: Can you just maybe walk us through, you know, 2026 and

Alan Ellingson: just help us, and this may be better suited for Alan, help us understand, you know, how to, what could, you know, drive the revenue higher? Right? Is there, what do we have for prediction markets in that revenue guide in particular? And obviously, you have given us a pretty wide, a wider field of play, right, on the EBITDA side as well. Right? What, you know, what could cause us to be, you know, higher or lower, you know, as we go through the year, particularly around predictions. I think that is the, you know, the part that we are trying to embed in the models.

Jason Robins: Thanks. Yeah. So I think predictions, you know, really is all upside. There is nothing in terms of revenue in the guide. We are assuming that this is a year that we spend a lot on customer acquisition in terms of, you know, new user offers. There probably will be some revenue realistically, but it is just too early to quantify, so we did not put any revenue in the guide. So I think that is definitely a source of upside. And I think the core business has a lot of upside too. You know, everybody gets hung up on handle. We have tried to sort of start to educate people that you cannot look at that in isolation.

A little bit more behind that. So, you know, if you look at last year, first ten months of the year, January through October, right before we issued our last guide, we had a net revenue margin of around 6.5%. And since then, you know, November, December, January, February to date, so, you know, almost the last four months or so, we have had a net revenue margin of over 9%, which is about 40% higher. This has to affect the handle, right? So in the beginning of the NFL season, when customers are winning, we had, you know, really high-teens handle growth a few weeks in that sort of October timeframe.

And then as we started doing better and as we started being more efficient with promo, we started seeing more revenue growth. We did great, as you saw from Q4, revenue-wise, but the handle is going to slow a little bit. Even despite that, we are still growing handle, especially if you look outside of NFL. Outside of NFL, every single sport is up double digits right now in terms of handle growth. So, you know, now that NFL is over, expect we will return something more like what you guys probably expected, but you are going to see a slowdown in handle growth when we are winning that much and also when we are optimizing promo.

Alan Ellingson: Okey doke. Thank you very much.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Stephen White Grambling from Morgan Stanley.

Alan Ellingson: Hey. Thank you. Maybe to follow-up on that question. I was hoping you could maybe give a little bit more detail on perhaps what you are seeing in terms of NGR spend in some of the older states, you know, the ones that have been legal longer versus some of the newer? And then as you think about this year and maybe over the next couple of years, maybe how to think through

Michael DeLalio: increasing penetration versus increasing spend per head. Thanks.

Jason Robins: We are seeing growth pretty much across states, you know, state cohorts, I should say, regardless of age. In terms of NGR, obviously there are differences in terms of where that is coming from. And I am sorry. What was the second part of your question?

Michael DeLalio: How you think about increasing whether it is a penetration of customers within a state, like, what the opportunity looks like there versus increasing spend per head?

Jason Robins: I think it has got to be both. I mean, the reality is that especially in the older states, the customer growth is going to slow over time, but we still have a lot of upside in terms of monetizing customers. Our retention numbers look great. And so as we drive that parlay mix up, as we add more things, I think you are going to continue to see increased monetization. In January, for example, our parlay handle mix was still up another 300 bps year over year, so it is still seeing really strong growth there. So that feels like a lever that is going to continue to produce dividends for at least the next several years.

And if you look at some of the parlay mix numbers in Europe and other parts of the world, it is much higher than where we are today. So it seems like there is a lot of upside there, and I still think there is a ton of room to optimize promo. I mean, we are just starting to deploy AI in our promo engine in terms of optimization, and I think that is a huge lever for us to get more efficient and probably produce better results on the top line too.

Alan Ellingson: Great. Thanks. I will jump back in the queue.

Operator: Our next question comes from the line of Eric Sheridan from Goldman Sachs.

Alan Ellingson: Thanks so much for taking the question. I just want to come back to the predictions topic and ask it maybe just from a bit of a different angle. As you think about the different outcomes that can produce return on the investments in predictions, how are you thinking about the levers of either expanding activity among existing users, widening the pool of people in your platform and sort of expanding the pie on the payer side? How should we be thinking about it as a lever for user growth and activity growth in terms of trying to measure the return? Thanks so much.

Jason Robins: Well, since the product is so similar, it really is not something that we see as largely incremental to our existing customers. And that is why we do not see much cannibalization from prediction operators in the states that we have been in. So really, for us, it is about incremental customers in

Michael DeLalio: other states, you know, some of the biggest states in the country like California, Texas,

Jason Robins: Florida, we are not present in with OSB, and we have predictions there now. So those are huge opportunities for us. It was about half the country population-wise that we were able to launch predictions, and so that is something, you know, really exciting.

In some ways I think of it as, like, even though it is not exactly the same thing, but just to sort of paint the picture of why we are excited, it would be like if you told me we opened up the rest of the U.S. overnight to some lesser version, but still very strong version, of, you know, sports product that could really monetize the customers and engage the customers in ways that we never were able to with Fantasy Sports.

Alan Ellingson: Perfect. Thank you.

Michael DeLalio: Thank you.

Operator: One moment for our next question. Our next question comes from the line of Benjamin Nicolas Chaiken from Mizuho. Hey, how is it going? Thanks for taking my question.

Michael DeLalio: Just one on prediction. Jason, how do you plan to build liquidity in the Railbird exchange? And maybe related, do you view the DraftKings Inc. OS platform as a competitive differentiator

Jason Robins: in this context? Thanks. I think, you know, the second one helps answer the first. Absolutely. It is a competitive differentiator. I mean, everything from our pricing models to our, you know, data science around player behaviors to our vast, you know, array of marketing and data behind that. We just have so much infrastructure and so much data to be able to build on and leverage, and I think that given the similarities of the products, it is going to be hugely advantageous for us.

In terms of, you know, the liquidity question, I think, first of all, you know, virtually every market maker out there is, you know, lining up at the door trying to get set up for Railbird. Obviously, they know we have come to really be aggressive and play here, so they are pretty excited. So we are going to have all the same market makers that you see on other platforms. Then I think the DraftKings Inc. market maker is going to be a real differentiator in terms of creating liquidity, particularly in some of the new types of markets and combo type of markets that we set up.

And again, because we have the pricing models, because we have the trading desk, we have all the things that you need already, we should be able to really quickly become one of the largest, if not the largest, market makers out there. So I think that gives us a huge advantage in terms of supply and liquidity. And we have not decided yet how many exchanges we want to operate on and exactly how we want to do that. We will definitely be operating our market maker on Railbird.

Michael DeLalio: Thank you. That is helpful.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Brandt Antoine Montour from Barclays.

Michael DeLalio: Good morning, everybody. Thanks for taking my question. So on prediction markets, could you guys help us with just what you spent or what you achieved sort of in late December post the launch, you know, why was not it very splashy? And then when you think about your advertising plan here going forward, how do you get around the fact that most of your work over the last few years has been more national advertising, but this is obviously going to be different with, you know, obviously a lot of legal OSB states that you would not necessarily want to be in advertising prediction markets in those markets, or maybe you would.

So maybe you could help us with that. Thank you.

Jason Robins: So when we first launched the product in December, it was very bare bones. It still is, frankly, but we have added a lot over the last

Michael DeLalio: few weeks.

Jason Robins: But, you know, we wanted to make sure, obviously,

Michael DeLalio: that we had a product that we felt was competitive, which we

Jason Robins: really are starting to feel like now. And then also as we start to launch Railbird, which is coming next quarter, and you start to, you know, put more through our fully integrated stack, we are going to capture more of the economics, and that helps a lot too to get the returns that you want on marketing spend. But, you know, for us, it is really about having the best product and making sure that when we really come and start being more aggressive that we feel like we have, you know, a very strong offering out there, and I do not think we are far off from that.

In terms of the question around, you know, marketing, I think this is actually a huge advantage of ours. Most customers do not really even understand the difference. So I think the national marketing footprint is a big advantage because we can, you know, drive people towards our product, and we use it in ways that we can rotate messages and have slightly different things, but in essence, it is the same general message to the customer. And I think that provides us a ton of leverage and synergy. It will drive value to both products at the same time.

And we actually have a lot more detail on that because I know it sounds a little opaque now, but we have a very clear strategy that we are going to lay out at our Investor Day. I do not want to spoil it now, but I am pretty excited about it that I think will answer your question directly on how we can really leverage that spend and get a huge synergy out of the national marketing spend that we have already.

Alan Ellingson: Thanks, Jason.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Trey Bowers from Wells Fargo.

Michael DeLalio: Hey, guys. I was wondering if you would be willing to just kind of break down a little more granularity around the revenue guide. Is it kind of an expectation of a certain level of handle all year and then different levels of hold and promo against that? Or I know you said that there is too much focus on handle, but the investors would love to get a sense of kind of the high end and the low end of the range. What went into that? Thanks.

Alan Ellingson: Yeah. You know, it is tricky because you can build it up that way, but then what happens is you are going to have periods throughout the year that you hold higher, and you have less promo, that handle is a little bit lower, and then you are going to have periods where there are customer-friendly outcomes or promos hit more, and that ends up pushing handles. So I think we feel much more comfortable in sort of the, you know, sum product of all this.

I think, by the way, that was part of where we messed up going into 2025 that we have gotten a lot smarter on, as we had this sequential, we are going to get this much handle and this much hold rate improvement from all the parlay mix, and we are going to cut promo by this much, failing to maybe account for the fact that when you cut promo, you know, even if it is efficient—sorry—even if it is inefficient, when you cut promo, you are going to have some impact.

And when you, you know, hold better, whether it is because of outcomes or because of more parlay mix, it is going to have some impact on handle too. Obviously, you know, the net is still very positive for us if you look at it, you know, with a huge growth year in terms of revenue, but, you know, those things do move in tandem. So we can build it up that way, but I think the big difference now is we are sort of looking at it, you know, these things all interact together. And if we have plans to raise hold and to cut promo, yes, that will have an impact on handle.

It does not always play out that way though because of outcomes and other things that cause variance.

Alan Ellingson: And I guess just a quick follow-up. The monthly unique player number was

Michael DeLalio: flat year over year. You called out that Jackpocket was down. But can you guys just give a little more color around how that number should trend over time and if that is even the right KPI to look at, or would really be curious just kind of thinking about player counts and further penetration into kind of your younger states? Thanks.

Alan Ellingson: Yeah. So for those who remember, feels like a long time ago, but 2024, you know, the theme of the year for us was just significant outperformance on customer acquisition, and that just was way more than we expected. Customer acquisition came back down to earth a little bit in 2025. You know, it was definitely still healthy, but it was a big drop from where we were in 2024, and more in line with where we thought we would be probably going into 2024. So good year.

With lower customer acquisition you are going to see MUPs decline because a lot of the early cost, you know, basically a new customer counts in the MUPs as you are getting them all year, and then a lot of those new customers churn. And then once they have gotten through that early churn period, the retention numbers are really high. And of course, from a revenue retention standpoint, we are still seeing over 100% retention a year after a new user cohort is acquired. So really healthy on that front, but if you look at MUPs, you are going to see a real impact from customer acquisition.

And obviously, Jackpocket had a bit of an impact, too, with Texas and some of the other things. So if you take that away, we had about 5% growth in MUPs.

Michael DeLalio: All right. Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Robert S. Fishman from MoffettNathanson.

Michael DeLalio: Good morning. Can you talk about how you would characterize the competitive environment and promotional intensity today, and expectations maybe baked in for the year ahead, both in OSB and prediction players? Then separately, can you just update us on the legislative front and whether prediction markets are pushing more states to start to consider legalizing OSB? Thank you.

Alan Ellingson: So first question, I think it is a very rational competitive environment from a promo standpoint right now. Promo is not a huge thing in predictions. So really where we see some of the things happening there is more on the external marketing spend side. But really rational in terms of promo levels at the moment. Obviously, we, you know, said we have a conservative guide, so we are prepared if things change and we will be able to deploy more. But as of now, we do think we have some cushion on the promo front in there. And then, you know—sorry. What was the second question?

Michael DeLalio: Just around the legislative front for predictive markets.

Alan Ellingson: Yeah. I mean, so definitely getting traction on that. I think also with tax increases, we are getting a lot of traction pushing back there. You know, my view, states would be absolutely crazy right now to raise taxes with everything going on with predictions. So definitely getting some good traction on both that and on future legalization. Hard to know yet because we are still in the midst of the sessions whether it is going to make a difference in pushing any new bills over the line, but I am optimistic from what I am hearing. I mean, it is definitely a point of discussion in the states and something they are taking very seriously.

So, you know, I would not be surprised if that is the difference between getting a, you know, state or two done this year or not.

Michael DeLalio: Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Robin Margaret Farley from UBS. Great. Thank you. I wonder if you could help us understand, I know you said you are not including prediction market revenue in your guide; in the EBITDA number, how much of that is a built-in EBITDA loss? Can you help us quantify for your prediction markets start-up costs so that we could think about the EBITDA from your

Robin Margaret Farley: you know, your core business? And also, there was something in the language of your guidance about line-of-sight states or something that seemed to imply you were including some start-up costs for new states in your EBITDA guidance, which I think you have not done in your more recent guidance, but maybe you can clarify if that is what was in there. Thanks.

Michael DeLalio: Yeah. So on the latter question, good catch, Robin. We

Alan Ellingson: did put Maine iGaming as well as Alberta in there. So, you know, there is some spend allocated to those states. We do not have exact timing on launch yet, but we feel certain enough that they are around the corner that we were able to quantify appropriately and put it in there. In terms of the predictions question, no revenue, as you noted, is in the guide. So, you know, not assuming we are going to get anything on the revenue side. From, you know, a spend perspective, I will break it out into kind of two categories. There is fixed cost, which is, you know, double digits but not, you know, that significant.

There is mostly, you know, existing headcount that we can repurpose, and there is a lot of new headcount too that we had to hire, so there is something there. But there is a lot of, you know, synergy also with some of the things we talked about in terms of the pricing models and other components of the business that we have built and the people operating those. So it will not be entirely incremental. It will be tens of millions. And then I think marketing, we are expecting to spend. So there is some incremental marketing there. For competitive purposes, I do not want to give an exact number.

But as I also noted, I think a huge advantage we are going to have is that we can repurpose some of our national spend, and we can also utilize some of our national spend to drive both OSB and prediction simultaneously. And we are going to talk a lot more about our strategy for that, which is really, you know, a big strategy unveil across product and marketing and a bunch of other things on Investor Day, which I think will better explain how we are approaching marketing. And at that point, we will have more specifics on this.

Robin Margaret Farley: I appreciate that. Just a quick follow-up question. You mentioned you call it combination trading options, I guess is like a would be, you know, sort of equivalent, like a parlay offering in prediction markets.

Can you talk about whether the fact that you have the sports data that at the moment I think the other prediction markets do not have access to or are not able to purchase because of sort of gaming license regulatory reasons, it seems like that will be a huge advantage that you have that data already and would that—I mean, in other words, is not that a major advantage over prediction markets that would not be able to access that data to create their own parlays?

Alan Ellingson: Oh, I think both that data as well as our vast historical database that we have built all of our pricing—remember, it has been years that we have been investing and building our pricing models to take all of this in-house. We bought SBTech and integrated in 2021; it was not until basically last year when we finally brought all of the major sports and all of the major markets in-house. So it takes time to amass that type of database. It takes time to build those models and really hone those models so that they are working at a level that is ready for prime time. We have all that already, and you are right.

We have the data coming in too. So I think from that standpoint, we are going to be extremely well positioned.

Robin Margaret Farley: Great. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Clark Lampen from BTIG.

Michael DeLalio: Thanks for taking the question. I have one on promo. Jason, I know you said you are seeing a rational promo environment within prediction, but I am curious if, as we think about the core Sportsbook market, have you seen any uptick in intensity from smaller-scale operators? And if so, is that something that is sort of reflected in the guidance? Is there potentially room for sort of less promotional leverage built into the forecast?

Robin Margaret Farley: Thanks.

Alan Ellingson: Well, we did build in some cushion. As I said, it is a very conservative approach to guide. So I do not think that is untrue, but not for the reason you are saying. We are seeing a very rational environment across both predictions and our traditional online sports betting and iGaming competitors. We have not seen a surge in promotional activity in a few years, thankfully. So hopefully that continues.

Michael DeLalio: Okay. Alan, I guess just sort of a quick one on marketing. To the extent that you do end up using a lot more of the sort of Amazon and NBC and ESPN national inventory that you have for prediction, is there still flexibility in 2026 if you are seeing better LTVs and, you know, CACs and response rates from the core customers to lean in there, or, you know, how would you, I guess, sort of assess the room to do both? Thank you. Absolutely. And this is one of the reasons why we are being so measured in our rollout of prediction markets.

As we start to evaluate the value of these customers, we do have flexibility to lean into marketing spend appropriately to make sure we are capturing long-term value. We are in this to win, and that means spending the appropriate amounts in 2026.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Jordan Maxwell Bender from Citizens. You might get into this in more detail at the Investor Day, but a question we often get is who are these prediction market players. So

Michael DeLalio: from the two months that you have been live or your just general expectations, can you just kind of shed light

Alan Ellingson: on that? Are they sharps? Are they whales? Do they play Pick Six? Do they play Fantasy? And just a follow-up, I am just thinking through the comments around maybe the underperformance

Michael DeLalio: on the handle for the NFL.

Jason Robins: You think that is just storyline-driven and kind of matchups, or is there anything else to kind of call out in that? Thank you.

Michael DeLalio: Yeah. I mean,

Alan Ellingson: the most common theme we are seeing with prediction players is they tend to be Californian and Texans. So, you know, I think that is really the big theme. Otherwise, they look a lot like our existing customers. I am sorry. What was the second question?

Alan Ellingson: Is there anything to unpack on the underperformance in handle on the NFL compared to everything else?

Alan Ellingson: I mean, really, it comes down to the point I made earlier on the net. Right? So we had a—we, just to remind everybody, January through October, first ten months of 2025, we had about 6.5% net revenue margin. That was, you know—then since then, it has been over 9%, which is a 40% increase. So you are going to see some changes to handle when your revenue is going up that much from other levers. That is the biggest thing. I think another point of evidence in that is you look at the non-NFL sports, they are actually up double digits in handle growth.

We have not been holding and promoing—we have not had this strong net revenue margins there. Obviously, there is some player crossover. And if you split it out from players that are not playing NFL or are just playing those, their handle is up even more. So it really clearly points towards there is just fluctuations in handle. But even despite that, we are still growing handle right now. I mean, January handle was up. We had handle growing in the high teens after we had some low hold weeks to start NFL earlier in the season.

But overall, you really have to look at the kind of net revenue, and as I said, you are not going to see, you know, zero effect to handle when you increase your net revenue margin 40% over a four-month period after ten months of having it at 6.5%.

Jason Robins: Thanks, Jason.

Operator: Thank you. At this time, I would now like to turn the conference back over to Jason Robins, CEO, for closing remarks.

Alan Ellingson: Thank you all for joining today's call. We are really excited and positioned really well for success in the future. Please join us at our virtual Investor Day coming up in March. We have a lot of exciting new things to unveil there, including our strategy for winning in predictions. Hope to see you all there. Thank you, and be well.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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