DraftKings Inc. 10-Q Summary: Quarter Ended June 30, 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. DraftKings Inc. operates as a digital sports and gaming company offering online and retail sports betting, iGaming, daily fantasy sports, digital lottery, and prediction markets. As of the reporting date, the company operates in 29 U.S. jurisdictions for online sports betting and 6 U.S. jurisdictions for iGaming, alongside operations in Ontario, Canada.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Revenue | $1,443.2 million | $1,512.5 million | $3,089.3 million | $2,921.3 million |
| Net Income (Loss) | $(67.6) million | $157.9 million | $(46.5) million | $124.1 million |
| Adjusted EBITDA | $114.6 million | $300.6 million | $282.5 million | $403.3 million |
| Diluted EPS | $(0.14) | $0.30 | $(0.09) | $0.23 |
| Cash & Equivalents | $983.9 million (as of June 30, 2026) | |||
| Total Debt (Principal) | ~$1.86 billion (Convertible Notes + Term B Loan) |
Liquidity: The company reported $983.9 million in cash and cash equivalents, excluding restricted cash and cash reserved for users. Total cash, restricted cash, and user reserves stood at $1.39 billion. The company maintains a $500 million revolving credit facility with $488.1 million available.
Material Changes vs. Prior Period
- Revenue Decline (QoQ): Q2 2026 revenue decreased 4.6% year-over-year to $1.44 billion. This was driven by a 10.6% drop in Sports revenue due to customer-friendly sports outcomes and increased promotional reinvestment for new customer acquisition. iGaming revenue grew 7.5%.
- Profitability Shift: The company swung from a net income of $157.9 million in Q2 2025 to a net loss of $67.6 million in Q2 2026. Operating loss widened significantly due to higher sales and marketing expenses ($322.5 million vs. $233.2 million) and increased cost of revenue.
- Key Performance Indicators: Monthly Unique Payers (MUPs) increased 9.1% year-over-year. However, Average Revenue Per MUP (ARPMUP) decreased 12.6% due to promotional activity and sports outcomes.
- Debt Structure: The company has a $600 million Term B Loan outstanding (principal $592.5 million) and $1.265 billion in Convertible Notes maturing in 2028.
Guidance, Outlook, and Risks
Management Commentary: Management attributes the Q2 revenue decline to strategic reinvestment in customer acquisition for the Sportsbook and new Prediction Markets offerings, alongside unfavorable sports outcomes. The company expects profitability to improve as jurisdictions mature and variable marketing expenses stabilize. The path to consolidated Adjusted EBITDA profitability depends on total contribution profit exceeding fixed costs.
Legal and Regulatory Risks: The filing details extensive litigation, including:
- Patent Disputes: Ongoing cases with Winview (Winview I and II), Micro-Gaming, and Interactive Games regarding patent infringement related to sports betting and gaming technology.
- Consumer Protection: Multiple class actions (e.g., Macek, Youngs, Scanlon) alleging deceptive promotions ("risk-free" bets) and targeting of users with gaming disorders.
- Regulatory Challenges: Litigation regarding the legality of Daily Fantasy Sports in California (Zhen v. DraftKings) and Texas, as well as trademark disputes with the NCAA.
Unusual Items: The company recorded $19.9 million in advocacy and legal expenses in Q2 2026 related to legislative efforts for legalization. Stock-based compensation was $82.6 million for the quarter.
Investor Verification Checklist
- Promotional Efficiency: Verify the long-term impact of increased promotional reinvestment on customer retention and lifetime value (LTV) versus the short-term revenue drag.
- Legal Exposure: Assess the potential financial impact of the Winview patent litigation and the various consumer protection class actions, particularly regarding "risk-free" bet promotions.
- Debt Obligations: Confirm the company's ability to service its debt load ($1.26B Convertible Notes + $600M Term Loan) given the current net loss position and cash burn from operations.
- Regulatory Expansion: Monitor the status of legalization efforts in key states (e.g., California, Texas) and the impact of the new Prediction Markets offering on revenue mix.
- Stock Repurchases: Review the remaining authorization under the $2.0 billion stock repurchase program and its impact on share count and liquidity.