DraftKings has formally launched its prediction markets platform, marking a strategic move into regulated financial forecasting. The rollout coincides with an analyst downgrading the stock and lowering the price target, signaling potential concerns over execution and profitability.
- DraftKings (DKNG) launched prediction markets for regulated real-world event forecasting
- Revenue from non-sports betting segments grew to 34% of total revenue in Q3 2025
- Analyst lowered DKNG price target from $125.00 to $120.00
- Prediction markets targeted to contribute up to $1.2B in annual revenue if successful
- Operating margins for new markets expected to lag behind core sportsbook business
- Regulatory compliance and user adoption are primary execution risks
DraftKings Inc. (DKNG) has officially rolled out its prediction markets offering, enabling users to place bets on real-world events ranging from political outcomes to sports results and economic indicators. The platform operates under state-specific regulatory frameworks, leveraging DraftKings’ existing infrastructure in licensed iGaming markets across the U.S. This expansion represents a pivotal step toward diversifying revenue beyond traditional daily fantasy sports and sports betting. The launch comes amid a shift in market sentiment. An analyst at a major broker recently reduced the stock’s price target by $5.00 per share, now setting it at $120.00, down from $125.00. While the firm maintained a 'Buy' rating, the downward revision underscores cautious optimism regarding the scalability and margin profile of prediction markets. The new product is expected to generate incremental revenue, though initial user adoption and regulatory hurdles remain variables. Key metrics from the company’s most recent quarter show DKNG reported $658 million in total revenue, with approximately 34% attributed to non-sports betting verticals. The introduction of prediction markets aims to accelerate growth in this segment, which could reach $1.2 billion in annualized revenue if scaled successfully. However, operating margins for the new product line are projected to be below current business averages due to higher compliance and technology costs. Market participants, including institutional investors and retail traders, are closely monitoring the integration of prediction markets into DraftKings’ ecosystem. The move may also influence competitors such as FanDuel and BetMGM, who could face pressure to expand similar offerings. Regulatory scrutiny remains elevated, particularly around consumer protection and data privacy, which could delay further rollouts in unregulated states.