Draftkings Inc.
02/13/2026 | Press release | Distributed by Public on 02/13/2026 06:11
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with other sections of this Annual Report, including "Item 1. Business" and the accompanying consolidated financial statements and related notes included elsewhere in this Annual Report.
Our Business
We are a digital sports entertainment and gaming company. We provide users with online and retail sports betting (together, "Sportsbook"), online casino ("iGaming"), daily fantasy sports ("DFS"), digital lottery courier, prediction markets and other product offerings.
Our mission is to make life more exciting by responsibly creating the world's favorite real-money games, betting experiences and event contracts trading. We accomplish this by creating an environment where our users can find enjoyment and fulfillment through Sportsbook, iGaming, DFS, digital lottery courier and prediction markets, as well as our other product offerings. We are also highly focused on our responsibility as a steward of this new era in real-money gaming. Our ethics guide our decision making, with respect to both the tradition and integrity of sports and our investments in regulatory compliance and consumer protection.
We continue to make deliberate and substantial investments in support of our mission and long-term growth. For example, we have invested in our product offerings and technology in order to continuously launch new product innovations; improve marketing, merchandising, and operational efficiency through data science; and deliver a great user experience. We also make significant investments in sales and marketing and incentives to grow and retain our paid user base, including personalized cross-product offers and promotions, and promote brand awareness to attract the "skin-in-the-game" sports fan. Together, these investments have enabled us to create a leading product built on scalable technology, while attracting a user base that has resulted in the rapid growth of our business.
Our priorities are to (a) continue to invest in our product offerings, (b) launch our product offerings in new jurisdictions, (c) create replicable and predictable state-level unit economics in Sportsbook and iGaming and (d) expand our product offerings. When we launch our Sportsbook and iGaming product offerings in a new jurisdiction, we invest heavily in customer acquisition, user retention and cross-selling until the new jurisdiction provides a critical mass of users engaged across our product offerings.
Our current technology is highly scalable with relatively minimal incremental spend required to launch our product offerings in new jurisdictions. We will continue to manage our fixed-cost base in conjunction with our market entry plans and focus our variable spend on marketing, user experience and support and regulatory compliance to become the product of choice for users and maintain favorable relationships with regulators. We also expect to improve our profitability over time as our revenue and gross profit expand as states mature, and our variable marketing expenses and fixed costs stabilize or grow at a slower rate.
Our path to increase profitability on an annual basis is based on the acceleration of positive contribution profit growth driven by increased revenue and gross profit generation from ongoing efficient customer acquisition, strong user retention, improved monetization from frequency and higher Net Revenue Margin, as well as scale benefits from investments in our product offerings and technology and general and administrative functions. In any given period, we expect to achieve profitability on a consolidated Adjusted EBITDA basis when total contribution profit exceeds the fixed costs of our business, which depends, in part, on the percentage of the U.S. adult population that has access to our product offerings and the other factors summarized in the section entitled "Cautionary Statement Regarding Forward-Looking Statements."
Financial Highlights and Trends
The following table sets forth a summary of our financial results for the periods indicated and is derived from our consolidated financial statements for the years ended December 31, 2025, 2024 and 2023:
| Year Ended December 31, | |||||||||||||||||
| (amounts in thousands, except per share amounts) | 2025 | 2024 | 2023 | ||||||||||||||
| Revenue | $ | 6,054,525 | $ | 4,767,699 | $ | 3,665,393 | |||||||||||
| Net Income (Loss) | 3,710 | (507,285) | (802,142) | ||||||||||||||
|
Adjusted EBITDA(1)
|
619,987 | 181,307 | (151,035) | ||||||||||||||
| Basic Earnings (Loss) Per Share | 0.01 | (1.05) | (1.73) | ||||||||||||||
| Diluted Earnings (Loss) Per Share | (0.01) | (1.05) | (1.73) | ||||||||||||||
|
Adjusted Diluted Earnings (Loss) Per Share(2)
|
0.66 | 0.24 | (0.41) | ||||||||||||||
(1)Adjusted EBITDA is a non-GAAP financial measure. See "-Non-GAAP Information" below for additional information about this measure and a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with U.S. GAAP.
(2)Adjusted Diluted Earnings (Loss) Per Share is a non-GAAP financial measure. See "-Non-GAAP Information" below for additional information about this measure and a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with U.S. GAAP.
Revenue increased by $1,286.8 million in 2025, compared to 2024, primarily due to the strong performance of our Sportsbook and iGaming product offerings as a result of continued healthy user engagement, efficient acquisition of new customers and higher net revenue margin.
Key Performance Indicators
Monthly Unique Payers ("MUPs"). We define MUPs as the number of unique paid users per month who had one or more real-money, paid engagements across one or more of our Sportsbook, iGaming, DFS, digital lottery courier, prediction markets or other product offerings via our technology. For reported periods longer than one month, we average the MUPs for the months in the reported period. Although the number of unique paid users includes those users that have participated in a real-money, paid engagement using only promotional incentives (which has not been a material number of users to date), which are fungible with other funds deposited into their wallets on our technology, it does not include users who have made a deposit but have not yet had a real-money, paid engagement.
MUPs is a key indicator of the scale of our online gaming user base and awareness of our brand. We believe that year-over-year growth in MUPs is also generally indicative of the long-term revenue growth potential of our online gaming product offerings, although MUPs in individual periods may be less indicative of our longer-term expectations. We expect the number of MUPs to grow as we attract, retain and re-engage users in new and existing jurisdictions and expand our product offerings to appeal to a wider audience.
The chart below presents our average MUPs for 2023, 2024 and 2025:
Average Revenue per MUP ("ARPMUP"). We define and calculate ARPMUP as the average monthly revenue for a reporting period divided by the average number of MUPs for the same period. ARPMUP is a key indicator of our ability to drive usage and monetization of our product offerings.
The chart below presents our ARPMUP for 2023, 2024 and 2025:
The increase in MUPs for 2025, compared to 2024, primarily reflects strong unique payer retention and acquisition across our Sportsbook and iGaming product offerings. Excluding the impact of the Jackpocket Transaction, MUPs increased 0.2 million, or 6.7%, to 3.5 million for 2025, compared to 2024.
ARPMUP increased in 2025, compared to 2024, primarily due to increased net revenue margin across both Sportsbook and iGaming. Excluding the impact of the Jackpocket Transaction, ARPMUP increased $23, or 19.1%, to $141 for 2025compared to 2024.
Sportsbook Handle. We define Sportsbook Handle as the total amount of settled customer wagers on our Sportsbook product offering. Sportsbook Handle provides useful information to investors and management as it is a key indicator of volume and customer engagement on our Sportsbook product offering that is not impacted by variability of sport outcomes and provides important insight into underlying growth trends.
Sportsbook Net Revenue Margin. We define Sportsbook Net Revenue Margin as Sportsbook revenue as a percentage of Sportsbook Handle. This provides useful information to investors and management as it is a key indicator in measuring the combined impact of our overall margin on Sportsbook product offering and promotional reinvestment.
The chart below presents our Sportsbook Handle, Sportsbook Net Revenue Margin, and revenue disaggregation for 2025, 2024, and 2023:
| Year Ended December 31, | |||||||||||||||||
| (amounts in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Sportsbook Handle | $ | 53,553,697 | $ | 48,061,148 | $ | 37,436,016 | |||||||||||
| Sportsbook Revenue | 3,827,091 | 2,902,857 | 2,106,403 | ||||||||||||||
| Sportsbook Net Revenue Margin | 7.1 | % | 6.0 | % | 5.6 | % | |||||||||||
| Sportsbook Revenue | 3,827,091 | 2,902,857 | 2,106,403 | ||||||||||||||
| iGaming Revenue | 1,804,613 | 1,507,808 | 1,216,749 | ||||||||||||||
| Other Revenue | 422,821 | 357,034 | 342,241 | ||||||||||||||
| Total Revenue | $ | 6,054,525 | $ | 4,767,699 | $ | 3,665,393 | |||||||||||
The increase in Sportsbook Handle of $5.5 billion, or 11.4%, in 2025, compared to 2024, and $10.6 billion, or 28.4%, in 2024, compared to 2023, is primarily due to MUPs increasing in 2025as compared to 2024, and in 2024as compared to 2023. The increase in MUPs was due to strong player retention and acquisition across our Sportsbook product offering.
The increase in Sportsbook Net Revenue Margin of 1.1 percentage points in 2025, compared to 2024, and 0.4 percentage points in 2024, compared to 2023, is due to improvement in our Sportsbook hold percentage and improved promotional reinvestment.
iGaming revenue increased $296.8 million, or 19.7%, in 2025, compared to 2024, and $291.1 million, or 23.9%, in 2024, compared to 2023,due to an increase in MUPs and ARPMUP for the product offering.
Other revenue increased $65.8 million, or 18.4%, in 2025, compared to 2024, primarily due to the acquisition of Jackpocket in May 2024 and an increase in revenue from our fantasy product offerings, which includes DFS and Pick6. Other revenue increased $14.8 million, or 4.3%, in 2024, compared to 2023, primarily due to our acquisition of Jackpocket in May 2024 offset by a reduction of gaming software revenue related to the winding down of external customers.
Non-GAAP Information
This Annual Report includes Adjusted EBITDA and Adjusted Diluted Earnings (Loss) Per Share, which are non-GAAP financial measures that we use to supplement our results presented in accordance with U.S. GAAP. We believe Adjusted EBITDA and Adjusted Diluted Earnings (Loss) Per Share are useful in evaluating our operating performance, similar to measures reported by our publicly-listed U.S. competitors, and regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted EBITDA and Adjusted Diluted Earnings (Loss) Per Share are not intended to be substitutes for any U.S. GAAP financial measure. As calculated, they may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.
We define and calculate Adjusted EBITDA as net income (loss) before the impact of interest income or expense (net), income tax provision or benefit, and depreciation and amortization, and further adjusted for the following items: stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below.
We define and calculate Adjusted Diluted Earnings (Loss) Per Share as diluted earnings (loss) per share attributable to common stockholders adjusted for the impact of amortization of acquired intangible assets; discrete tax benefits attributed to acquisitions; stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below.
We include non-GAAP financial measures because they are used by management to evaluate our core operating performance and trends and to make decisions regarding the allocation of capital and new investments. Adjusted EBITDA and Adjusted Diluted Earnings (Loss) Per Share exclude certain expenses that are required in accordance with U.S. GAAP because they are non-recurring items (for example, in the case of transaction-related costs and advocacy and other related legal expenses), non-cash expenditures (for example, in the case of depreciation and amortization, remeasurement of warrant liabilities and stock-based compensation), or non-operating items which are not related to our underlying business performance (for example, in the case of interest income and expense and litigation, settlement and related costs).
Adjusted EBITDA
The table below presents our net income (loss), which is the most directly comparable financial measure calculated in accordance with U.S. GAAP, reconciled to Adjusted EBITDA for the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| (amounts in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Net income (loss) | $ | 3,710 | $ | (507,285) | $ | (802,142) | |||||||||||
| Adjusted for: | |||||||||||||||||
|
Depreciation and amortization (1)
|
275,488 | 270,854 | 201,920 | ||||||||||||||
| Interest (income) expense, net | 19,941 | (44,300) | (55,739) | ||||||||||||||
|
Income tax (benefit) provision (2)
|
4,274 | (86,341) | 10,170 | ||||||||||||||
|
Stock-based compensation (3)
|
339,311 | 381,367 | 398,463 | ||||||||||||||
|
Transaction-related costs (4)
|
13,213 | 26,386 | 3,060 | ||||||||||||||
|
Litigation, settlement, and related costs (5)
|
- | 81,246 | 34,500 | ||||||||||||||
|
Advocacy and other related legal expenses (6)
|
2,000 | 16,049 | - | ||||||||||||||
| Loss (gain) on remeasurement of warrant liabilities | (4,747) | 4,945 | 57,543 | ||||||||||||||
|
Other non-recurring and non-operating costs (income) (7)
|
(33,203) | 38,386 | 1,190 | ||||||||||||||
| Adjusted EBITDA | $ | 619,987 | $ | 181,307 | $ | (151,035) | |||||||||||
(1)The amounts include the amortization of acquired intangible assets of $149.3 million,$159.8 million and $117.3 million for 2025, 2024 and 2023, respectively.
(2)In 2025, the Company recorded a discrete income tax benefit of $14.6 million, which was attributable to non-recurring partial releases of the Company's U.S. valuation allowance as a result of the purchase accounting for Railbird. In 2024, the Company recorded a discrete tax benefit of $87.3 million, which was attributable to non-recurring partial releases of the Company's U.S. valuation allowance as a result of the purchase accounting for the Jackpocket Transaction.
(3)Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.
(4)Includes capital markets advisory, consulting, accounting and legal expenses related to the evaluation, negotiation and consummation of transactions and offerings that are under consideration, pending or completed, as well as integration costs related to acquisitions.
(5)Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our ordinary-course business operations.
(6)Reflects non-recurring and non-ordinary course costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate certain product offerings and are actively seeking licensure, or similar approval, for those product offerings. This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.
(7)This primarily includes the change in fair value of certain assets and liabilities, including a $38.0 million gain related to contingent consideration in 2025, as well as our equity method share of investee's gains and losses and other costs relating to non-recurring and non-operating items. For 2024, this amount also includes $27.8 million in expense related to the discontinuance of our Reignmakers product offering, $7.5 million in expenses related to the termination of a market access
agreement, and a $5.8 million loss on the sale of Vegas Sports Information Network, LLC, offset by $20.9 million related to gaming tax credits as a result of audits and appeals related to prior periods.
Adjusted Diluted Earnings (Loss) Per Share
The table below presents the Company's Adjusted Diluted Earnings (Loss) Per Share reconciled to its diluted earnings (loss) per share attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP, for the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Diluted earnings (loss) per share attributable to common stockholders | $ | (0.01) | $ | (1.05) | $ | (1.73) | |||||||||||
| Adjusted for: | |||||||||||||||||
|
Amortization of acquired intangible assets (1)
|
0.30 | 0.33 | 0.25 | ||||||||||||||
|
Discrete tax benefit attributed to acquisitions (2)
|
(0.03) | (0.18) | - | ||||||||||||||
|
Stock-based compensation(3)
|
0.68 | 0.79 | 0.86 | ||||||||||||||
|
Transaction-related costs (4)
|
0.03 | 0.05 | 0.01 | ||||||||||||||
|
Litigation, settlement, and related costs (5)
|
- | 0.17 | 0.07 | ||||||||||||||
|
Advocacy and other related legal expenses (6)
|
0.00 | 0.03 | - | ||||||||||||||
| Loss (gain) on remeasurement of warrant liabilities | 0.00 | 0.01 | 0.12 | ||||||||||||||
|
Other non-recurring and non-operating costs (income) (7)
|
(0.06) | 0.08 | 0.00 | ||||||||||||||
|
Tax impact of adjusting items (8)
|
(0.26) | - | - | ||||||||||||||
| Adjusted Diluted Earnings (Loss) Per Share* | $ | 0.66 | $ | 0.24 | $ | (0.41) | |||||||||||
_____________
* Weighted average diluted number of shares used to calculate Adjusted Diluted Earnings (Loss) Per Share for the years ended December 31, 2025, 2024, and 2023 was 495.9 million, 482.0 million and 462.6 million, respectively; totals may not sum due to rounding.
(1)The amounts include the amortization of acquired intangible assets of $149.3 million,$159.8 million and $117.3 million for 2025, 2024 and 2023, respectively.
(2)In 2025, the Company recorded a discrete income tax benefit of $14.6 million, which was attributable to non-recurring partial releases of the Company's U.S. valuation allowance as a result of the purchase accounting for Railbird. In 2024, the Company recorded a discrete tax benefit of $87.3 million, which was attributable to non-recurring partial releases of the Company's U.S. valuation allowance as a result of the purchase accounting for the Jackpocket Transaction.
(3)Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.
(4)Includes capital markets advisory, consulting, accounting and legal expenses related to the evaluation, negotiation, and consummation of transactions and offerings that are under consideration, pending, or completed, as well as integration costs related to acquisitions.
(5)Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our ordinary-course business operations.
(6)Reflects non-recurring and non-ordinary course costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate certain product offerings and are actively seeking licensure, or similar approval, for those product offerings. This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.
(7)This primarily includes the change in fair value of certain assets and liabilities, including a $38.0 million gain related to contingent consideration in 2025, as well as our equity method share of investee's gains and losses and other costs relating to non-recurring and non-operating items. For 2024, this amount also includes $27.8 million in expense related to the discontinuance of our Reignmakers product offering, $7.5 million in expenses related to the termination of a market access agreement, and a $5.8 million loss on the sale of Vegas Sports Information Network, LLC, offset by $20.9 million related to gaming tax credits as a result of audits and appeals related to prior periods.
(8)Beginning in the first quarter of 2025, the Company began applying an estimated non-GAAP effective tax rate, which is 23% as of December 31, 2025. The non-GAAP effective tax rate reflects the non-GAAP tax provision commensurate with the Company's level of non-GAAP profitability, which was determined after adjusting for the non-GAAP adjustments presented above and excluding the impact of changes in the valuation allowance.
Key Factors Affecting Our Results
Our financial position and results of operations depend to a significant extent on the following factors:
Industry Opportunity and Competitive Landscape
We primarily operate within the global entertainment, gaming, and prediction markets industries which are comprised of diverse product offerings that compete for consumers' time and disposable income. Our short-to-medium term focus is on the North American regulated gaming industry, particularly the opportunity in online sportsbook and iGaming. We believe our industry-leading product offerings, strong technology services, more than a decade of U.S. online and mobile gaming experience, established brand and vertically integrated solutions make us a partner of choice for state regulators, professional sports leagues and teams, gaming companies and other sports entertainment and related businesses.
When we enter new jurisdictions, we face significant competition from other established competitors, some of which may have more experience in sports betting and iGaming and access to more resources. We believe our analytics and technology, and the lessons learned from our DFS operations and prior launches of our online sportsbook and iGaming product offerings, will enable us to capture significant share in newly available jurisdictions.
In addition, our growth prospects may suffer if we are unable to develop successful product offerings or if we fail to pursue additional product offerings. Further, if we fail to make the right investment decisions in our product offerings, technology and services, we may not effectively attract and retain users and our revenue and results of operations may be negatively impacted.
Legalization, Regulation and Taxation
Our growth prospects depend on the legalization of online sports betting and iGaming in additional jurisdictions, predominantly within the United States. Our strategy is to expand our Sportsbook and iGaming product offerings into new jurisdictions as they are legalized and become accessible to the extent it is economically beneficial to do so. As of February 10, 2026, 39 U.S. states, the District of Columbia and Puerto Rico have legalized some form of sports betting. Of those 41 legal jurisdictions, 33 have legalized online sports betting. All 33 jurisdictions are live, and DraftKings operates in 27 of them. The U.S. jurisdictions with statutes legalizing iGaming are Connecticut, Delaware, Maine, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia.
The process of securing the necessary licenses or partnerships to operate in each jurisdiction may take longer than we anticipate. In addition, legislative or regulatory restrictions and product taxes may make it less attractive or more difficult for us to operate in a particular jurisdiction. For example, certain jurisdictions require us to have a relationship with a retail operator for online sportsbook access, which tends to increase our cost of revenue. States that have established state-run monopolies may limit opportunities for private sector participants like us. We nonetheless believe our proprietary gaming software positions us to become a partner of choice to power state-run sportsbooks.
States impose taxes on regulated offerings, the rates of which may vary substantially between states and product offerings. Sales taxes may also apply in certain jurisdictions. We are also subject to a federal excise tax of 25 basis points on the amount of each sportsbook bet.
Ability to Acquire, Retain and Monetize Users
We grow our business by attracting new paid users to our product offerings and increasing their level of engagement with our product offerings over time. To effectively attract and retain paid users and to re-engage former paid users, we invest in a variety of marketing channels in combination with personalized customer promotions, most of which can be used across all of our product offerings (such as free contest entries or bets or matching deposits). These investments and personalized promotions are intended to increase consumer awareness and drive engagement.
Managing Betting Risk
Sports betting and iGaming are characterized by an element of chance. Our revenue is impacted by variations in the hold percentage (the ratio of net win to total amount wagered) on bets placed on, or the actual outcome of, games or events on which users bet. Although our product offerings generally perform within a defined statistical range of outcomes, actual outcomes may vary for any given period, and a single large bet or the result of a significant sporting event can have a sizeable impact on our short-term financial performance. Our hold is also affected by factors that are beyond our control, such as a user's experience and behavior, the mix of games played, the financial resources of users and the volume of bets placed. As a result of variability in these factors, actual hold rates on our product offerings may differ from the theoretical win rates we have
estimated and could result in the winnings of our gaming users exceeding those anticipated. We seek to mitigate these risks through data science and analytics and rules built into our technology, as well as active management of our amounts at risk at a point in time, but we may not always be able to do so successfully, particularly over short periods, which can result in financial losses as well as revenue volatility.
Results of Operations
2025 Compared to 2024
The following table sets forth a summary of our consolidated results of operations for the years indicated, and the changes between periods.
| Year Ended December 31, | ||||||||||||||||||||||||||
| (amounts in thousands, except percentages) | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
| Revenue | $ | 6,054,525 | $ | 4,767,699 | $ | 1,286,826 | 27.0 | % | ||||||||||||||||||
| Cost of revenue | 3,556,947 | 2,950,561 | 606,386 | 20.6 | % | |||||||||||||||||||||
| Sales and marketing | 1,379,880 | 1,264,920 | 114,960 | 9.1 | % | |||||||||||||||||||||
| Product and technology | 459,912 | 397,114 | 62,798 | 15.8 | % | |||||||||||||||||||||
| General and administrative | 673,603 | 764,103 | (90,500) | (11.8) | % | |||||||||||||||||||||
| Loss from operations | (15,817) | (608,999) | 593,182 | 97.4 | % | |||||||||||||||||||||
| Interest income (expense), net | (19,941) | 44,300 | (64,241) | n.m. | ||||||||||||||||||||||
| Gain (loss) on remeasurement of warrant liabilities | 4,747 | (4,945) | 9,692 | n.m. | ||||||||||||||||||||||
| Other gain (loss), net | 38,024 | (23,514) | 61,538 | n.m. | ||||||||||||||||||||||
| Income (loss) before income tax (benefit) provision and loss from equity method investment | 7,013 | (593,158) | 600,171 | n.m. | ||||||||||||||||||||||
| Income tax provision (benefit) | 4,274 | (86,341) | (90,615) | n.m. | ||||||||||||||||||||||
| (Gain) loss from equity method investments | (971) | 468 | 1,439 | n.m. | ||||||||||||||||||||||
| Net income (loss) | $ | 3,710 | $ | (507,285) | $ | 510,995 | 100.7 | % | ||||||||||||||||||
* Percentage changes that are considered not meaningful are denoted with n.m.
Revenue. Revenue increased $1.3 billion, or 27.0%, to $6.1 billion in 2025, from $4.8 billion in 2024. The increase was primarily attributable to our Sportsbook and iGaming product offerings which increased $1.2 billion, or 27.7%, to $5.6 billion in 2025 due to MUPs increasing by 7.9% and ARPMUP increasing by 17.9% as compared to 2024. The increase in MUPs was primarily due to strong player retention and acquisition across our Sportsbook and iGaming product offerings. The increase in ARPMUP was primarily due to an increase in Sportsbook Net Revenue Margin from 6.0% in 2024 to 7.1% in 2025, as a result of increased Sportsbook hold percentage and improved promotional reinvestment, as well as improved handle and net revenue margin in iGaming.
Cost of Revenue.Cost of revenue increased $606.4 million, or 20.6%, to $3.6 billion in 2025, from $3.0 billion in 2024. The increase was due, in part, to revenue growth as outlined above and a resulting increase in our variable expenses, primarily gaming taxes and payment processing fees, which increased $473.4 million and $65.4 million, respectively.
Cost of revenue as a percentage of revenue decreased by 3.1%percentage points to 58.7% in 2025 from 61.9% in 2024, primarily driven by lower payment processing fees as a percentage of total revenue and improved promotional reinvestment across our Sportsbook and iGaming product offerings, partially offset by higher gaming tax rates in certain jurisdictions.
Sales and Marketing.Sales and marketing expense increased $115.0 million, or 9.1%, to $1.4 billion in 2025, from $1.3 billion in 2024. The increase was primarily attributable to an increase in advertising costs of $75.2 million.
Product and Technology.Product and technology expense increased $62.8 million, or 15.8%, to $459.9 million in 2025 from $397.1 million in 2024, primarily due to increased headcount in our product and engineering departments.
General and Administrative.General and administrative expense decreased $90.5 million, or 11.8%, to $673.6 million in 2025 from $764.1 million in 2024. The decrease was primarily driven by non-recurring expenses recognized in the prior year, including $27.8 million related to the discontinuance of our Reignmakers product offering, and an $81.2 million reduction in non-ordinary course litigation, settlement and related costs.
Interest Income (Expense), net.Interest income (expense), net decreased $64.2 million to $19.9 million of net interest expense in 2025 from $44.3 millionof net interest income in 2024, primarily due to interest expense from the Term B Loan (as defined below) of $30.7 million, fluctuations in cash balances and interest rates during the respective periods, and the inclusion of $25.6 million of interest income on customer deposits in revenue in 2025.
Gain (Loss) on Remeasurement of Warrant Liabilities.We recorded a gain on remeasurement of warrant liabilities of $4.7 million in 2025, compared to a loss of $4.9 million in 2024, primarily due to changes in the underlying share price of our Class A common stock.
Other Gain (Loss), net. We recorded a gain of $38.0 million in 2025, as compared to loss of $23.5 million in 2024. The gain in 2025 was attributable to the revaluation of certain contingent consideration arrangements. The loss in 2024 was primarily attributable to a $5.8 million loss on the sale of Vegas Sports Information Network, LLC and a $12.9 million decrease in the fair value of certain financial assets.
Income Tax Provision (Benefit). We recorded an income tax provision of $4.3 million in 2025, as compared to an income tax benefit of $86.3 million in 2024. This change was primarily due to an income tax benefit of $87.3 million in 2024, which was attributable to non-recurring partial releases of the Company's U.S. valuation allowance as a result of the purchase accounting for our business combinations.
Net Income (Loss).Net income (loss) improved by $511.0 million to $3.7 million net income in 2025 from a net loss of $507.3 million in 2024, for the reasons discussed above.
2024 Compared to 2023
A discussion of changes in our results of operations in 2024 compared to 2023 has been omitted from this Annual Report, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 14, 2025, which is available free of charge on the SEC's website at www.sec.gov and at www.DraftKings.com.
Quarterly Performance Trend and Seasonality
Our user engagement and financial performance is seasonal in nature, as indicated by the following charts, which present our average MUPs, ARPMUP, Sportsbook Handle and Sportsbook Net Revenue Margin for the last eight quarters, and the explanations that follow.
| (amounts in thousands) | Q1'24 | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | |||||||||||||||||||||
| Sportsbook Handle | $ | 12,001,424 | $ | 10,793,014 | $ | 10,365,068 | $ | 14,901,643 | $ | 13,880,391 | $ | 11,474,841 | $ | 11,402,405 | $ | 16,796,059 | |||||||||||||
| Sportsbook Revenue | 734,055 | 686,889 | 656,920 | 824,993 | 881,957 | 997,872 | 596,119 | 1,351,143 | |||||||||||||||||||||
| Sportsbook Net Revenue Margin | 6.1 | % | 6.4 | % | 6.3 | % | 5.5 | % | 6.4 | % | 8.7 | % | 5.2 | % | 8.0 | % | |||||||||||||
| Sportsbook Revenue | 734,055 | 686,889 | 656,920 | 824,993 | 881,957 | 997,872 | 596,119 | 1,351,143 | |||||||||||||||||||||
| iGaming Revenue | 369,997 | 350,552 | 361,460 | 425,799 | 423,471 | 429,660 | 451,300 | 500,182 | |||||||||||||||||||||
| Other Revenue | 70,944 | 67,000 | 77,110 | 141,980 | 103,378 | 84,975 | 96,600 | 137,868 | |||||||||||||||||||||
| Total Revenue | $ | 1,174,996 | $ | 1,104,441 | $ | 1,095,490 | $ | 1,392,772 | $ | 1,408,806 | $ | 1,512,507 | $ | 1,144,019 | $ | 1,989,193 | |||||||||||||
Our business experiences the effects of seasonality based on the relative popularity of certain sports. Although our technology supports contests and betting on sporting events throughout the year, the fourth quarter is when our users tend to be most engaged, primarily due to the overlapping time frame of the NFL and NBA seasons, which are the most popular sports amongst our users. As a result, we have historically generated higher revenues in our fourth quarter compared to other quarters. We anticipate that this trend will continue, though our mix of revenues in each quarter and our key performance indicators will also be impacted by the timing of new jurisdiction launches and the introduction of new product offerings.
In addition, revenue and key performance indicators for a given quarter or fiscal year may differ substantially due primarily to professional sports season scheduling, including the frequency of play. For example, during the NFL season, our user engagement and revenue is generally highest on Sundays. The number of Sundays in a fiscal reporting period may differ from quarter to quarter and year to year, resulting in revenue volatility between comparative periods. In contrast, the MLB season, which traditionally falls in our second and third quarters, is characterized by numerous, daily games throughout the season, which tends to result in higher DFS contestant engagement and more Sportsbook bets per paid user relative to the NFL season. Historically, MLB play has attracted a more dedicated but smaller user base to our product offerings.
The suspension, postponement, rescheduling, shortening and cancellation of major sports seasons and sporting events may materially impact our results of operations by, for example, reducing our customers' use of, and spending on, our Sportsbook, predictions, and DFS product offerings. However, our product offerings that do not rely on sports seasons and sporting events, such as iGaming, may partially offset such an adverse impact on revenue.
Liquidity and Capital Resources
We had $1.1 billionin cash and cash equivalents as of December 31, 2025 (excluding restricted cash and cash reserved for users, which we segregate on behalf of our paid users for all jurisdictions and product offerings). We believe our cash on hand is sufficient to meet our current working capital and capital expenditure requirements for a period of at least twelve months. We will continue to evaluate our long-term operating performance and cash needs and believe we are well positioned to continue to fund the operations of our business long-term.
Our material cash requirements include the following contractual and other obligations:
Convertible Debt. In March 2021, we issued zero-coupon convertible senior notes in an aggregate principal amount of $1,265.0 million (the "Convertible Notes"). The Convertible Notes mature on March 15, 2028, subject to earlier conversion, redemption or repurchase. In connection with the pricing of the Convertible Notes and the exercise of the option to purchase additional Convertible Notes, we entered into privately negotiated capped call transactions (the "Capped Call Transactions"). The Capped Call Transactions are expected generally to reduce potential dilution to DraftKings Inc.'s Class A common stock upon any conversion of the Convertible Notes. The net cost of $124.0 million incurred to enter into the Capped Call Transactions was recorded as a reduction to additional paid-in capital on the Company's consolidated balance sheet. As of December 31, 2025, the Convertible Notes, net of issuance costs, balance was $1,259.1 million.
Credit Facility.In November 2024, we and certain of our subsidiaries entered into a credit agreement (as amended, the "Credit Agreement") with various financial institutions, as lenders, and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, providing for a senior secured revolving credit facility of up to $500.0 million (the "Revolving Credit Facility"). The Revolving Credit Facility provides for revolving loans, swing line borrowings and letters of credit and has a maturity date of November 7, 2029. As of December 31, 2025, $10.0 million in letters of credit were issued under the Revolving Credit Facility, with $490.0 million available for borrowing.
Term B Loan. In March 2025, we and certain of our subsidiaries entered into a first amendment to the Credit Agreement, providing for a new class of incremental term loans under the Credit Agreement in an aggregate principal amount of
$600.0 million (the "Term B Facility" and, such term loans, the "Term B Loan"), with a maturity date of March 4, 2032. The Term B Facility requires principal payments in the amount of 1.00% per annum of the original aggregate principal amount of the Term B Loan payable in quarterly installments. The Term B Loan bears interest at the Company's election at either (i) in the case of Term SOFR Loans, Term SOFR plus an applicable margin of 1.75% per annum, or (ii) in the case of ABR Term Loans, ABR plus an applicable margin of 0.75% per annum (with each of the capitalized terms used in clauses (i) and (ii) as defined in the Credit Agreement). As of December 31, 2025, there was$595.5 million outstanding under the Term B Facility.
Leases. We have lease arrangements for certain corporate office facilities, data centers and motor vehicles. As of December 31, 2025, the Company had lease commitments of $66.9 million, with $15.6 millionpayable within twelve months.
Other Purchase Obligations. We have certain non-cancelable contracts with vendors, licensors and others requiring us to make future cash payments. As of December 31, 2025, these purchase obligations were $2.3 billion, with $527.4 millionpayable within twelve months.
Cash Flows
The following table summarizes our cash flows for the periods indicated.
| Year Ended December 31, | |||||||||||||||||
| (amounts in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Net cash provided by (used in) operating activities | $ | 662,855 | $ | 417,767 | $ | (1,751) | |||||||||||
| Net cash provided by (used in) investing activities | (165,997) | (566,601) | (90,360) | ||||||||||||||
| Net cash provided by (used in) financing activities | (222,456) | (144,466) | (63,221) | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents, restricted cash, and cash reserved for users | 274,402 | (293,300) | (155,332) | ||||||||||||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at beginning of period | 1,330,193 | 1,623,493 | 1,778,825 | ||||||||||||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at end of period | $ | 1,604,595 | $ | 1,330,193 | $ | 1,623,493 | |||||||||||
2025 Compared to 2024
Operating Activities. Net cash provided by operating activities in 2025 was $662.9 million, compared to $417.8 million provided by operating activities in 2024, primarily reflecting an improvement in net income (loss), net of non-cash items, of $482.8 million for the reasons discussed in "Results of Operations" above, and $237.7 millionof cash used from changes in operating assets and liabilities, primarily related to timing of player activity, impacting receivables reserved for users and liabilities to users, as well as timing of vendor payments.
Investing Activities. Net cash used in investing activities in 2025 decreased by $400.6 million to $166.0 million from $566.6 million in 2024, mainly reflecting a decrease in cash paid for acquisitions of $425.1 million in cash paid for acquisitions, net of cash acquired, related to larger cash flow outflows from business combinations completed in 2024, including the acquisition of Jackpocket.
Financing Activities.Net cash used in financing activities in 2025 increased by $78.0 million to $222.5 million from $144.5 million in 2024, primarily reflecting an increase in purchases of treasury stock of $154.9 million related to the satisfaction of withholding taxes due upon the vesting of restricted stock units and an increase in purchases of treasury stock of $523.5 million related to the Company's stock repurchase program offset by proceeds received from the Term B Loan of $588.1 million.
2024 Compared to 2023
A discussion of changes in cash flows in 2024 compared to 2023 has been omitted from this Annual Report, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 14, 2025, which is available free of charge on the SEC's website at www.sec.gov and at www.DraftKings.com.
Critical Accounting Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. Preparation of the financial statements requires our management to make judgments, estimates and assumptions that impact the reported amount of revenue and expenses, assets and liabilities and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate or assumption to be critical when (a) the estimate or assumption is complex in nature or requires a high degree of judgment and (b) the use of different judgments, estimates and assumptions could have a material impact on our consolidated financial statements. Our significant accounting policies are described in Note 2 of the consolidated financial statements included elsewhere in this Annual Report. Our critical accounting estimates are described below:
Loss Contingencies
Our loss contingencies, which are included within the "other long-term liabilities" caption on our consolidated balance sheets, are uncertain by nature and their estimation requires significant management judgment as to the probability of loss and estimation of the amount of loss. These contingencies include, but may not be limited to, litigation, regulatory investigations and proceedings and management's evaluation of complex laws and regulations, including those relating to indirect taxes, and the extent to which they may apply to our business and industry. See Notes 7 and 16 to our consolidated financial statements for more information.
We regularly review our contingencies to determine whether the likelihood of loss is probable or reasonably possible and to assess whether a reasonable estimate of the loss can be made. Determination of whether a loss estimate can be made is a complex undertaking that considers the judgment of management, third-party research, the prospect of negotiation and interpretations by regulators and courts, among other information. When a loss is determined to be probable, as that term is defined under U.S. GAAP, and the amount of the loss can be reasonably estimated, an estimated contingent liability is recorded. We continually reevaluate our indirect tax and other positions for appropriateness.
Goodwill
Goodwill is tested for impairment at the reporting unit level, which is the same or one level below an operating segment. In accordance with ASC Topic 350Intangibles - Goodwill and Other ("ASC 350"), our business is classified into two reporting units. Prior to the fourth quarter of 2025, the Company operated as a single reporting unit for purposes of goodwill allocation and impairment assessment. Upon the acquisition of Railbird and the launch of our new prediction markets product offering in the fourth quarter of 2025, the Company reassessed its reporting structure and determined that prediction markets is a standalone reporting unit, and we therefore now operate as two reporting units to which goodwill is allocated. We review and evaluate our goodwill and indefinite life intangible assets for potential impairment at a minimum annually, in the fourth quarter, or more frequently if circumstances indicate that impairment is possible.
In testing goodwill for impairment, we have the option to begin with a qualitative assessment, commonly referred to as "Step 0," to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, including changes in our management, strategy and primary user base. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then perform a quantitative goodwill impairment analysis by comparing the carrying amount to the fair value of the reporting unit. In estimating the fair value of the reporting unit, we may use key assumptions such as revenue growth rates, gross margin and estimated costs for future periods and well as peer group market valuation multiples and discount rates. If the carrying amount exceeds the fair value, goodwill will be written down to the fair value and recorded as impairment expense in the consolidated statements of operations. We perform our impairment testing annually and when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We performed our annual impairment assessment of goodwill as of October 1, 2025, using Step 0 and concluded that goodwill was not impaired as the fair value of our reporting units is significantly in excess of our carrying value.
Business Combinations
We account for business acquisitions in accordance with ASC Topic 805, Business Combinations("ASC 805"). We measure the cost of an acquisition as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. We record goodwill for the excess of (i) the total costs of acquisition, fair value of any non-controlling interests and acquisition date fair value of any previously held equity interest in the acquired business over (ii) the fair value of the identifiable net assets of the acquired business.
The acquisition method of accounting requires us to exercise judgment and make estimates and assumptions based on available information regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities related to uncertain tax positions and contingencies. We must also refine these estimates over a one-year measurement period to reflect any new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair value of assets and liabilities in connection with an acquisition, these adjustments could materially impact our results of operations and financial position. Estimates and assumptions that we must make in estimating the fair value of future acquired technology, user lists and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expenses. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed, which could materially impact our results of operations.
On May 22, 2024, we completed our acquisition of 100% of the equity interest of Jackpocket Inc., pursuant to the terms of the Jackpocket Merger Agreement (as defined below). On December 3, 2024, we completed our acquisition of 100% of the equity interest of Simplebet Inc., pursuant to the terms of the Simplebet Merger Agreement (as defined below). On October 21, 2025, we completed our acquisition of 100% of the equity interest of Railbird Technologies Inc. pursuant to the terms of the Railbird Merger Agreement (as defined below). The transactions were accounted for under ASC 805. In accordance with the acquisition method, we recorded the fair value of assets acquired and liabilities assumed. The allocation of the consideration to the assets acquired and liabilities assumed is based on various estimates.
Contingent Consideration
We recorded contingent consideration resulting from certain business combinations, including Simplebet and Railbird, at their fair value at the acquisition date. Each reporting period thereafter and until settlement, we revalue the remaining obligations and record an increase or decrease in their fair value as an adjustment in our statement of operations. We measure our contingent consideration at fair value using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The fair value of contingent consideration was generally calculated using customary valuation models based on probability-weighted outcomes of meeting certain future performance targets and forecasted results. The significant unobservable inputs used in the fair value measurements generally include the projections of future financial results in relation to the business, including market based assumptions, revenue volatility, equity volatility, operational leverage ratio, as well as management judgment regarding the probability of achieving a future performance target. Significant increases or decreases to any of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual maximum of the contingent consideration. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate at the acquisition date and amount paid will be recorded in our results of operations.
Stock-based Compensation
Our historical and outstanding stock-based compensation awards, including the issuances of restricted stock awards under our equity compensation plans, have typically included service-based or performance-based vesting conditions.
The fair value of RSUs is measured on the grant date based on the closing fair market value of our common stock. The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period. For awards with only service-based vesting conditions, we record compensation cost for these awards using the straight-line method less an assumed forfeiture rate.
For awards with performance-based or market-based vesting conditions, we recognize compensation cost over the expected performance achievement period based on the probability of achieving the performance criteria. The assumptions underlying
these valuations and management's assessment of achieving the performance criteria represent management's best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors, probabilities or expected outcomes change and our management uses significantly different assumptions or estimates, our stock-based compensation expense for future periods could be materially different.
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