DraftKings misses Q2 targets as prediction markets eat into sportsbook revenue

DraftKings reported second-quarter sales and earnings that fell short of analyst expectations. Prediction markets, once a niche corner of the betting world, are now big enough to move the needle for a publicly traded company. The 27% problem During the 2026 World Cup, prediction markets captured roughly 27% of legal U.S. sports betting volume. That is nearly a third of the addressable market going to platforms that look and feel nothing like a traditional sportsbook. Polymarket, which runs on blockchain infrastructure, saw its international platform post volumes exceeding $7 billion in May 2026. Kalshi, a federally regulated prediction exchange, is competing on the same turf. Neither of them is paying the same state-by-state licensing costs that DraftKings and FanDuel have absorbed for years. Prediction markets offer tighter fees on a wider range of events, from sports outcomes to political races to economic data releases. DraftKings is not sitting still DraftKings acquired Railbird, a CFTC-licensed exchange, in 2025. That purchase gave DraftKings the regulatory foundation to operate its own prediction market product without starting from scratch. The result is DraftKings Predictio...