Posted on: May 21, 2026, 11:43h.
Last updated on: May 21, 2026, 11:43h.
- DraftKings is enhancing its prediction market platform
- The company is unlocking cost advantages
- Analysts predict a significant number of current DraftKings users could switch to the new event contracts
DraftKings (NASDAQ: DKNG) has made a notable entrance in the prediction market arena with the launch of DraftKings Predictions last December. The firm is swiftly advancing in the event contracts domain, leading analysts to forecast it as a potential long-term leader in this sector.
Analyst Nick McKay from Freedom Capital Markets has started coverage of DraftKings with a “buy” recommendation and a 12-month price target of $30, suggesting a potential 20% upside from its closing price on May 20. He identified DraftKings’ “Super App” as a key contributor to future growth in prediction markets.
Among the company’s 10.5 million unique customers, we anticipate many are likely to embrace DraftKings’ offerings due to: (1) the integration of Predictions within the Super App, (2) a unified account and wallet system, (3) an intuitive betslip interface, with Prediction options gradually aligning with traditional sportsbook formats, and (4) the company’s strong background in live market betting and parlays,
Despite the optimism surrounding DraftKings’ prediction market potential, some recent analyses have issued sell ratings on the stock. Last week, BNP Paribas assigned DraftKings a rare “sell” rating, highlighting competitive challenges from platforms such as Kalshi and Polymarket.
Expanding Horizons in Prediction Markets
Currently, prediction markets are governed at the federal level, alleviating operators from navigating a complex array of state-by-state regulations. This positions companies like DraftKings to tap into a wider clientele than traditional sports betting.
As McKay points out, with DraftKings Predictions, the firm expects to reach 95% of the adult population in the U.S. by the end of this year, compared to just 52% in its sportsbook segment.
“States historically against legal sports betting—like California and Texas—will now be within reach of our audience. The gross margins linked to prediction market bets are believed to be 10% to 30% greater than those of conventional sports betting,” says the analyst.
DraftKings has also noted the margin potential with prediction markets, indicating that event contract margins could surpass those typical of online sports wagering.
Favorable Risk/Reward Scenario for DraftKings Stock
While DraftKings shares have dipped 29.3% over the past year, recent trends have shown a rebound, with an 8% increase in the last month. The operator reported earnings of $100 million in April EBITDA, and McKay sees a positive risk/reward landscape for its stock.
“For FY:26, we project revenue and adjusted EBITDA of $6.75 billion and $800 million compared to guidance of $6.5 billion to $6.9 billion and $700 million to $900 million,” concludes the Freedom Capital Markets analyst. “For FY:27, our expectations are $7.5 billion and $1.17 billion, with core profitability potentially exceeding $1 billion after accounting for an expected $200 million to $300 million in prediction markets expenditure.”