DraftKings (DKNG) Wells Fargo 9th Annual Consumer Conference summary

Core business performance and outlook

• Sportsbook handle growth reached 15% month-to-date, with strong customer engagement and iGaming share gains, supporting a $1 billion adjusted EBITDA target for 2026 and material growth in 2027.

• Parlay mix increased by 300 basis points, and cost control initiatives, including AI-driven efficiencies, are expected to further improve EBITDA margins toward a 30% target in core states.

• Customer acquisition remains robust in both new and mature states, with over 11–12 million trailing 12-month actives and significant cross-sell from existing databases.

• Marketing spend is being optimized, with increased investment in response to strong conversion rates, potentially pulling forward spend from 2027 to accelerate revenue and gross profit in 2026–2027.

• Capital allocation remains focused on organic growth, with M&A considered opportunistically but not prioritized.

Prediction markets and competitive positioning

• Prediction market volume has grown nearly 2.5x since July, with the product now holding close to double-digit market share and leading in NFL market breadth.

• The universal app rollout enables seamless cross-state betting, enhancing customer experience and activation, especially for users with prior deposits in other states.

• Competitive advantage is driven by content breadth, user experience, and rapid innovation, with combo bets now comprising nearly 30% of NFL prediction volume.

• Gross margins in prediction markets are higher than in Sportsbook, though net revenue margins are slightly lower; overall economics are expected to be neutral or positive compared to OSB.

• Regulatory uncertainty persists, but the business is positioned to benefit regardless of legal outcomes, with strong cross-sell into other products and resilience in the core business.

iGaming and state expansion

• iGaming has regained share in key states, with growth acceleration attributed to new features, successful launches like Lightning Link, and improved daily rewards.

• Maine is expected to launch iGaming later this year, with momentum building in the D.M.V. area and potential for future expansion in states like Illinois and New York.

• Product improvements stem from sustained execution and team changes over the past year, rather than any single feature.

• Regulatory and tax considerations are influencing state adoption, with increased recognition of the benefits of legal iGaming for revenue and consumer protection.

• DK Replay in Oregon offers year-round sports engagement but is not considered iGaming; expansion of this product is possible but not a current focus.