DAVY VIEW

The key focus from DraftKings’ update is a very significant downgrade to FY26 aEBITDA, which it primarily attributes to investment in its prediction markets offering. It has also issued FY27 guidance which is below consensus and our expectations. The quantum of the downgrade and the fact that there is potentially a binary regulatory outcome for sports products in prediction markets will cause investor concern. DraftKings has outlined what it sees as very positive momentum in its prediction markets launch, which justifies this investment. However, the inherent uncertainty around achieving returns on this investment will weigh.