DraftKings Q3 2026 net loss widens to $469M
DraftKings reported $1.669 billion in cash, restricted cash and user-reserved cash at September 30, alongside $63.0 million of nine-month operating cash flow.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
DraftKings Inc. reported third-quarter 2026 revenue of $1.329 billion, compared with $1.144 billion a year earlier, while net loss attributable to common stockholders was $468.7 million versus $256.8 million. Sports revenue, including sportsbook and prediction markets, was $783.6 million, and iGaming revenue was $460.9 million. For the first nine months, revenue was $4.418 billion and net loss was $515.3 million, compared with $4.065 billion and $132.7 million, respectively, in 2025.
Operating cash flow for the nine months was $63.0 million, versus $342.4 million in 2025. Cash, restricted cash and cash reserved for users totaled $1.669 billion at September 30, 2026. On August 31, DraftKings repurchased $320.0 million of convertible note principal for $300.4 million, recognized an $18.6 million gain on extinguishment, and had $945.0 million principal remaining.
DraftKings Predictions has operated as a futures commission merchant since August 2026, and DraftKings also operates DKeX, a designated contract market. On August 25, 2026, an amendment to its credit agreement provided a $750.0 million senior secured revolving credit facility maturing August 25, 2031. The facility had no principal outstanding and $738.1 million available as of September 30, 2026.
1 point · 0 major0 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointQ3 revenue: $1.329 billion, versus $1.144 billion a year earlier.
Negative
- Moderate pointQ3 net loss: $468.7 million, versus $256.8 million a year earlier.
- Moderate pointNine-month operating cash flow was $63.0 million, versus $342.4 million.
Filing Explained
The 700 million dollar Term B-2 loan was outstanding at quarter-end, with quarterly principal payments starting December 31, 2026.
DraftKings reports
The report also says DraftKings entered an agreement on
Key Figures
Third-quarter revenue: $1.329 billion
Third-quarter net loss attributable to common stockholders: $468.7 million loss
Nine-month revenue: $4.418 billion
+5 more
8 metrics
Third-quarter revenue
$1.329 billion
Three months ended September 30, 2026; $1.144 billion in 2025
Third-quarter net loss attributable to common stockholders
$468.7 million loss
Three months ended September 30, 2026; $256.8 million loss in 2025
Nine-month revenue
$4.418 billion
Nine months ended September 30, 2026; $4.065 billion in 2025
Nine-month net loss attributable to common stockholders
$515.3 million loss
Nine months ended September 30, 2026; $132.7 million loss in 2025
Net cash from operating activities
$63.0 million
Nine months ended September 30, 2026; $342.4 million in 2025
Cash, restricted cash and cash reserved for users
$1.669 billion
At September 30, 2026
Convertible note principal repurchased
$320.0 million
Repurchased August 31, 2026, for $300.4 million
Senior secured revolving credit facility
$750.0 million
Facility provided under the August 25, 2026 amendment
Key Terms
futures commission merchant, designated contract market, Level 3 fair value measurement, Net First Lien Leverage Ratio, +1 more
5 terms
futures commission merchant regulatory
"operated as a futures commission merchant"
A futures commission merchant (FCM) is a licensed firm that executes and clears futures and options trades for clients, holds margin funds, and handles settlement and recordkeeping. Think of an FCM as the specialized broker and custodian for futures markets that also provides credit and risk controls; its reliability affects an investor’s ability to trade, the safety of their money, and the costs and speed of executing positions.
designated contract market regulatory
"a designated contract market doing business as DKeX"
A designated contract market is a regulated, public exchange where standardized futures and options contracts are bought and sold, similar to a supervised marketplace with clear rules and a referee to enforce them. It matters to investors because trading on such an exchange provides transparent prices, predictable contract terms and built‑in safeguards that reduce counterparty risk, making it easier to assess value and execute trades reliably.
Level 3 fair value measurement financial
"a Level 3 fair value measurement"
Net First Lien Leverage Ratio financial
"maintain a Net First Lien Leverage Ratio not to exceed 4.50:1.00"
contingent consideration financial
"The present value of the contingent consideration"
Contingent consideration is an additional payment agreed when one company buys another that will be paid later only if specific future targets are met, such as revenue, profit, or regulatory milestones. It matters to investors because it shifts risk between buyer and seller and affects the acquiring company's future cash flow and reported value — like promising a bonus after results are proven.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were DKNG's Q3 2026 revenue and net loss?
DraftKings reported Q3 2026 revenue of $1.329 billion and net loss attributable to common stockholders of $468.7 million. In Q3 2025, revenue was $1.144 billion and the net loss was $256.8 million. Sports revenue was $783.6 million and iGaming revenue was $460.9 million in Q3 2026.
How much operating cash flow did DKNG report for the first nine months of 2026?
DraftKings generated $63.0 million of net cash from operating activities in the nine months ended September 30, 2026, compared with $342.4 million in the same 2025 period. Investing activities used $177.4 million and financing activities provided $179.2 million in the 2026 period.
When did DraftKings Predictions begin operating as a futures commission merchant?
DraftKings Predictions launched in December 2025 as an introducing broker and has operated as a futures commission merchant since August 2026. The prediction-market operations also include DKeX, a designated contract market, and market-making activities on DKeX and other designated contract markets.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from__________ to ___________.
Commission file number 001-41379
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) (Zip Code)
(617 ) 986-6744
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report).
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 4, 2026, there were 498,291,090 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 393,013,951 shares of the registrant’s Class B common stock, par value $0.0001 per share, outstanding.
DraftKings Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 2026
Table of Contents
| Page | |||||
PART I. FINANCIAL INFORMATION | 2 | ||||
Item 1. Financial Statements | 2 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 38 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 51 | ||||
Item 4. Controls and Procedures | 51 | ||||
PART II. OTHER INFORMATION | 53 | ||||
Item 1. Legal Proceedings | 53 | ||||
Item 1A. Risk Factors | 53 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 53 | ||||
Item 3. Defaults Upon Senior Securities | 53 | ||||
Item 4. Mine Safety Disclosures | 53 | ||||
Item 5. Other Information | 53 | ||||
Item 6. Exhibits | 54 | ||||
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
DRAFTKINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value)
| September 30, 2026 | |||||||||||
| (Unaudited) | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Cash reserved for users | |||||||||||
| Accounts receivable | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Equity method investments | |||||||||||
| Deposits and other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Liabilities to users | |||||||||||
| Operating lease liabilities, current portion | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Convertible notes, net of issuance costs | |||||||||||
| Term B Loans, net of issuance costs | |||||||||||
| Operating lease liabilities | |||||||||||
| Long-term income tax liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
| Commitments and contingent liabilities (Notes 5 and 13) | |||||||||||
Stockholders’ equity: | |||||||||||
Class A common stock, $ | $ | $ | |||||||||
Class B common stock, $ | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive income | |||||||||||
| Total stockholders’ equity | $ | $ | |||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
2
DRAFTKINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Product and technology | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Income (loss) from operations | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
| Gain (loss) on remeasurement of warrant liabilities | |||||||||||||||||||||||
| Other gain (loss), net | |||||||||||||||||||||||
| Income (loss) before income tax and equity method investments | ( | ( | ( | ( | |||||||||||||||||||
| Income tax provision (benefit) | ( | ( | |||||||||||||||||||||
| (Gain) loss from equity method investments | ( | ( | ( | ( | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Earnings (loss) per share attributable to common stockholders: | |||||||||||||||||||||||
| Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
DRAFTKINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(Amounts in thousands)
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Treasury Stock Amount | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock for RSU withholding | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit vesting | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock under Stock Repurchase Program | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock for RSU withholding | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under Employee Stock Purchase Plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit vesting | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock under Stock Repurchase Program | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for contingent consideration | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | $ | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock for RSU withholding | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit vesting | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for contingent consideration | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at September 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
4
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Treasury Stock Amount | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock for RSU withholding | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit vesting | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock under Stock Repurchase Program | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock for RSU withholding | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under Employee Stock Purchase Plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for contingent consideration | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit vesting | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock under Stock Repurchase Program | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock for RSU withholding | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit vesting | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock under Stock Repurchase Program | ( | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balances at September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
DRAFTKINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
See accompanying notes to unaudited condensed consolidated financial statements.
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net income (loss) attributable to common stockholders | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Non-cash interest (income) expense, net | |||||||||||
| Stock-based compensation | |||||||||||
| (Gain) loss on remeasurement of warrant liabilities | ( | ||||||||||
| (Gain) loss on repurchase of convertible notes | ( | ||||||||||
| (Gain) loss from equity method investments | ( | ( | |||||||||
| Deferred income taxes | ( | ||||||||||
| Other non-cash (gain) loss, net | ( | ( | |||||||||
| Change in operating assets and liabilities, net of effect of acquisitions: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Deposits and other non-current assets | |||||||||||
| Accounts payable and accrued expenses | |||||||||||
| Liabilities to users | |||||||||||
| Long-term income tax liability | |||||||||||
| Other long-term liabilities | |||||||||||
| Net cash flows provided by (used in) operating activities | $ | $ | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Purchases of property and equipment | $ | ( | $ | ( | |||||||
| Cash paid for internally developed software costs | ( | ( | |||||||||
| Cash paid for gaming market access and licenses | ( | ( | |||||||||
| Other investing activities | ( | ( | |||||||||
| Net cash flows provided by (used in) investing activities | $ | ( | $ | ( | |||||||
| Cash Flows from Financing Activities: | |||||||||||
| Repurchase of convertible notes | $ | ( | $ | ||||||||
| Proceeds from Term B Loans, net | |||||||||||
| Repayment of Term B Loans principal | ( | ( | |||||||||
| Purchase of treasury stock for RSU withholding | ( | ( | |||||||||
| Purchase of treasury stock under Stock Repurchase Program | ( | ( | |||||||||
| Proceeds from exercise of stock options | |||||||||||
| Proceeds from shares issued under Employee Stock Purchase Plan | |||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by (used in) financing activities | $ | $ | |||||||||
| Net increase (decrease) in cash and cash equivalents, restricted cash, and cash reserved for users | |||||||||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at the beginning of period | |||||||||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period | $ | $ | |||||||||
| Disclosure of cash and cash equivalents, restricted cash, and cash reserved for users | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Cash reserved for users | |||||||||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period | $ | $ | |||||||||
| Supplemental Disclosure of Noncash Investing and Financing Activities: | |||||||||||
| Decrease in warrant liabilities from cashless exercise of warrants | $ | $ | |||||||||
| Shares issued for contingent consideration | |||||||||||
| Stock-based compensation capitalized to internally developed software costs | |||||||||||
| Supplemental Disclosure of Cash Activities: | |||||||||||
| Increase (decrease) in cash reserved for users | $ | $ | ( | ||||||||
| Cash paid for interest | |||||||||||
| Cash paid for income taxes, net of refunds | |||||||||||
6
DRAFTKINGS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share data, unless otherwise noted)
1.Description of Business
We are a digital sports and gaming company. We provide users with online and retail sports betting (together, “Sportsbook”), online casino (“iGaming”), daily fantasy sports (“Fantasy”), digital lottery courier (“Lottery”), prediction markets and other offerings.
As of September 30, 2026, 39 U.S. states, the District of Columbia and Puerto Rico have some form of authorized sports betting. Of those 41 jurisdictions, 33 have legalized online sports betting. All 33 jurisdictions are live, and DraftKings operates in 29 of them. As of September 30, 2026, the U.S. jurisdictions with statutes legalizing iGaming are Connecticut, Delaware, Maine, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia.
As of September 30, 2026, we operate our Sportsbook offering in Arizona, Arkansas, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Tennessee, Vermont, Virginia, Washington, D.C., West Virginia, Wyoming, Alberta, Canada, and Ontario, Canada, and we operate retail sportsbooks in Arizona, Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, New Hampshire, New Jersey, Washington, Wisconsin and Puerto Rico. As of September 30, 2026, we offer our iGaming offering in Connecticut, Michigan, New Jersey, Pennsylvania, West Virginia, Alberta, Canada, and Ontario, Canada. We also have arrangements in place with land-based casinos to expand operations into additional states upon the passing of relevant legislation, the issuance of related regulations and the receipt of required licenses.
DraftKings Predictions launched in December 2025 as an introducing broker, marking the Company’s entry into prediction markets under the oversight of the U.S. Commodity Futures Trading Commission (“CFTC”). DraftKings Predictions is a standalone mobile application and web-based offering that enables eligible customers to trade contracts based on real-world outcomes across a range of markets, including sports and financial markets. Since August 2026, DraftKings Predictions has operated as a futures commission merchant. The Company’s prediction market operations also include operating Railbird Exchange LLC, a designated contract market doing business as DKeX (“DKeX”), and conducting market-making activities on DKeX and other designated contract markets.
2.Summary of Significant Accounting Policies and Practices
Basis of Presentation and Principles of Consolidation
These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“U.S. GAAP”) for interim reporting. As such, certain notes or other information that are normally required by U.S. GAAP have been omitted if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes as of and for the fiscal year ended December 31, 2025, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on February 13, 2026 (the “2025 Annual Report”). These condensed consolidated financial statements are unaudited; however, in the opinion of management, they include all normal and recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial statements for the periods presented. Results of operations reported for interim periods are not necessarily indicative of results for the entire year, due to seasonal fluctuations in the Company’s revenue as a result of the timing of various sports seasons, sporting events, and other factors.
Recently Issued Accounting Pronouncements Not Yet Adopted
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In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement–Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated disclosure of income statement expenses. ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026, with early adoption permitted. We are currently evaluating the impact of this standard on our disclosure of income statement expenses.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 changes the accounting for internal-use software under Accounting Standards Codification (“ASC”) 350-40. ASU 2025-06 clarifies when to begin capitalizing costs. ASU 2025-06 is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this standard and do not expect this standard to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies the applicability of interim reporting guidance and reorganizes and clarifies interim disclosure requirements under ASC 270, Interim Reporting, including the addition of a disclosure principle requiring disclosure of material events occurring since the most recent annual reporting period. ASU 2025-11 is effective for interim reporting periods within annual periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this standard and do not expect this standard to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025-12”). ASU 2025-12 makes targeted amendments to various topics within the Accounting Standards Codification intended to clarify existing guidance and correct minor inconsistencies. ASU 2025-12 is effective for interim and annual reporting periods beginning after December 15, 2026, with early adoption permitted. Certain amendments require retrospective application. We are currently evaluating the impact of this standard and do not expect this standard to have a material impact on our consolidated financial statements.
3.Business Combinations
2025 Business Combinations
Acquisition of Railbird Technologies Inc. (“Railbird”)
On October 21, 2025 (the “Railbird Acquisition Date”), the Company entered into a definitive agreement (the “Railbird Merger Agreement”) to acquire Railbird and its wholly owned subsidiary Railbird Exchange, LLC, a federally licensed exchange designated by the Commodity Futures Trading Commission (the “Railbird Transaction”).
Under the terms of the Railbird Merger Agreement and subject to certain exclusions contained therein, Railbird equityholders received closing consideration of approximately $18.3 million of cash consideration and approximately $28.7 million of equity consideration on the Railbird Acquisition Date, excluding contingent consideration. The present value of the contingent consideration of $37.8 million at the Railbird Acquisition Date, which is payable upon, and subject to, the achievement of certain performance targets, is included in Other long-term liabilities on the consolidated balance sheet.
Operating results for Railbird on and after the Railbird Acquisition Date are included in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2026. Pro forma financial information for the acquisition has not been presented because the impact of this acquisition was immaterial to our consolidated financial statements.
Preliminary Purchase Price Accounting for the Railbird Transaction
On the Railbird Acquisition Date, the Company acquired 100 % of the equity interests of Railbird pursuant to the Railbird Merger Agreement. The following is a summary of the consideration issued or paid on the Railbird Acquisition Date:
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| Cash consideration | $ | ||||
Equity consideration (1) | |||||
Contingent consideration (2) | |||||
| Total consideration | $ | ||||
(1)Includes the issuance of approximately 0.9 million shares of the Company’s Class A common stock issued at $33.62 per share.
(2)The Company recorded a fair value estimate of the contingent consideration, as disclosed in “Note 6 – Fair Value Measurements”. Contingent payments have a maximum value of up to $200 million, 47.5 % of which will be contingent consideration and 52.5 % of which will be recorded as compensation under ASC 805, Business Combinations. The payments will be settled, at the Company’s option, in shares of the Company’s Class A common stock or in a combination of shares of the Company’s Class A common stock and cash; provided that, for each Railbird equityholder that is an accredited investor, shares of the Company’s Class A common stock will represent at least 70 % of the contingent consideration such equityholder receives. The Company’s Class A common stock to be issued as contingent payment will be valued on the basis of a 30 -day volume-weighted average price of the Company’s Class A common stock determined at or around the issuance thereof based on certain post-closing performance metrics.
The purchase price allocation for Railbird set forth herein is preliminary and subject to change within the measurement period, which will not extend beyond one year from the Railbird Acquisition Date. Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined and may include adjustments pertaining to intangible assets acquired and tax liabilities assumed, including the calculation of deferred tax assets and liabilities. Any such adjustments may be material.
The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed in connection with the consummation of the Railbird Transaction on the Railbird Acquisition Date. The values set forth below are preliminary, pending finalization of valuation analyses:
| Assets acquired: | |||||
| Cash and cash equivalents | $ | ||||
| Restricted cash | |||||
| Intangible assets | |||||
| Deposits and other non-current assets | |||||
| Total identifiable assets acquired | |||||
| Liabilities assumed: | |||||
| Accounts payable and accrued expenses | |||||
| Other long-term liabilities | |||||
| Total liabilities assumed | |||||
| Net assets acquired (a) | |||||
| Purchase consideration (b) | $ | ||||
| Goodwill (b) – (a) | $ | ||||
Goodwill represents the excess of the gross consideration transferred over the difference between the fair value of the underlying assets acquired and the underlying liabilities assumed. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of benefits from securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a market participant, as well as acquiring a talented workforce and cost savings opportunities. Goodwill recognized is not deductible for tax purposes. Goodwill associated with the Railbird Transaction is assigned as of the Railbird Acquisition Date to the Company’s prediction markets reporting unit, which was established in 2025 as a result of the launch of our prediction markets offering.
The Company recorded an intangible asset for an operating license of $58.1 million that will be amortized over four years . We valued the operating license by using the income approach, specifically the with-and-without method, which isolates the cash flows attributable to the asset. The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including revenue growth rates and discount rates. We amortize definite-lived assets based on the pattern over which we expect to receive the economic benefit from these assets.
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Transaction Costs
For the year ended December 31, 2025, the Company incurred $5.5 million in advisory, legal, accounting and management fees in connection with the Railbird Transaction, which were included in general and administrative expenses on the Company’s consolidated statements of operations. Of this amount, $3.9 not
4.Intangible Assets
As of September 30, 2026, intangible assets, net consists of the following:
| Weighted-Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
| Amortized intangible assets: | |||||||||||||||||||||||
| Developed technology | $ | $ | ( | $ | |||||||||||||||||||
| Internally developed software | ( | ||||||||||||||||||||||
| Gaming market access and licenses | ( | ||||||||||||||||||||||
| Customer relationships | ( | ||||||||||||||||||||||
| Trademarks, tradenames and other | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||||||||
As of December 31, 2025, intangible assets, net consists of the following:
| Weighted-Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
| Amortized intangible assets: | |||||||||||||||||||||||
| Developed technology | $ | $ | ( | $ | |||||||||||||||||||
| Internally developed software | ( | ||||||||||||||||||||||
| Gaming market access and licenses | ( | ||||||||||||||||||||||
| Customer relationships | ( | ||||||||||||||||||||||
| Trademarks, tradenames and other | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||||||||
Amortization expense was $72.0 million and $214.0 million for the three and nine months ended September 30, 2026, respectively, and $60.6 million and $187.1 million for the three and nine months ended September 30, 2025, respectively.
5.Current and Long-term Liabilities
Credit Agreement
Revolving Credit Facility
On November 7, 2024, the Company 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 “Original Revolving Credit Facility”). The Original Revolving Credit Facility had a maturity date of November 7, 2029.
On August 25, 2026, the Company entered into a second amendment to the Credit Agreement (the “Second Amendment”), which, among other things, provided for a new $750.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), on terms substantially similar to those of the Original Revolving Credit Facility, to replace the Original Revolving Credit Facility. The Revolving Credit Facility has a maturity date of August 25, 2031.
Revolving loans under the Revolving Credit Facility bear interest at the Company’s election at either (i) Term SOFR (as defined in the Credit Agreement), plus an applicable margin ranging from 1.75 % to 2.25 % depending on the Company’s Net
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First Lien Leverage Ratio (as defined in the Credit Agreement) or (ii) a base rate that is equal to the greatest of (a) the federal funds rate plus 0.50 %, (b) the prime rate and (c) Term SOFR for a one month interest period plus 1.00 %, in each case plus an additional applicable margin ranging from 0.75 % to 1.25 % depending on the Company’s Net First Lien Leverage Ratio. In addition, the Company is required to pay a commitment fee quarterly in arrears ranging from 0.250 % to 0.375 % per annum of the unused portion of the Revolving Credit Facility depending on the Company’s Net First Lien Leverage Ratio.
As of September 30, 2026, the Credit Agreement provided a Revolving Credit Facility of up to $750.0 million, and there was no principal outstanding thereunder. As of September 30, 2026, $11.9 million in letters of credit were issued under the Revolving Credit Facility, with $738.1 million available for borrowing.
Term B-1 Facility
On March 4, 2025, the Company 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-1 Facility” and, such term loans, the “Term B-1 Loan”). The Term B-1 Facility matures on March 4, 2032, and all unpaid borrowings, together with accrued and unpaid interest thereon, are repayable on such date (unless extended in accordance with the terms of the Credit Agreement). In addition, 1.00 % of the original principal amount of the Term B-1 Loan is payable per annum in quarterly installments. In connection with the borrowing of the Term B-1 Loan, the Company incurred $11.9 million of lender fees and $3.1 million of debt financing costs, which are being amortized through the maturity date. The amortization of debt issuance costs was $0.5 million and $1.6 million for the three and nine months ended September 30, 2026, respectively, and $0.5 million and $1.2 million for the three and nine months ended September 30, 2025, respectively, which is included in Interest income (expense), net on the Company’s condensed consolidated statements of operations.
The Term B-1 Loan under the Term B-1 Facility bears interest at the Company’s election at either (x) in the case of Term SOFR Loans, Term SOFR plus an applicable margin of 1.75 % per annum, or (y) 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 (x) and (y) as defined in the Credit Agreement). As of September 30, 2026, the aggregate principal amount of the Term B-1 Loan outstanding was $591.0 million, which bore interest at a weighted-average rate of 5.54 % per annum. As of September 30, 2026, the fair value of the Term B-1 Loan approximates the carrying value, which was calculated using quoted market prices for similar debt instruments and other observable market inputs, which is a Level 2 fair value measurement.
Term B-2 Facility
The Second Amendment also provided for a new class of incremental term loans under the Credit Agreement in an aggregate principal amount of $700.0 million (the “Term B-2 Facility” and, such term loans, the “Term B-2 Loan”). The Term B-2 Facility matures on August 25, 2033. The Term B-2 Loan is repayable in quarterly installments equal to 0.25 % of its aggregate principal amount, or $1.75 million per quarter, commencing on December 31, 2026, with all remaining unpaid principal and accrued and unpaid interest due at maturity. In connection with the borrowing of the Term B-2 Loan, the Company incurred $10.8 million of lender fees and $2.9 million of debt financing costs, which are being amortized through the maturity date. Amortization of debt issuance costs related to the Term B-2 Loan was $0.2
The Term B-2 Loan under the Term B-2 Facility bears interest at the Company’s election at either (x) in the case of Term SOFR Loans, Term SOFR plus an applicable margin of 2.00 % per annum, or (y) in the case of ABR Term Loans, ABR plus an applicable margin of 1.00 % per annum (with each of the capitalized terms used in clauses (x) and (y) as defined in the Credit Agreement). As of September 30, 2026, the aggregate principal amount of the Term B-2 Loan outstanding was $700.0 million, which bore interest at a weighted-average rate of 5.67 % per annum. As of September 30, 2026, the fair value of the Term B-2 Loan approximates the carrying value, which was calculated using quoted market prices for similar debt instruments and other observable market inputs, which is a Level 2 fair value measurement.
The performance of the Company’s obligations under the Credit Agreement is secured by a first-priority security interest on substantially all of its assets. The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including dividend restrictions, a public corporate credit rating requirement for so long as any Term B-1 or Term B-2 Loans are outstanding, and, with respect to the Revolving Credit Facility only, a financial covenant that the Company is required to maintain a Net First Lien Leverage Ratio not to exceed 4.50 :1.00, which is tested only if the aggregate amount of (i) revolving loans outstanding and (ii) letters of credit outstanding under the Revolving Credit Facility in excess of a specified threshold (unless cash collateralized) is in excess of 40 % of the total commitments under the Revolving Credit Facility. As of September 30, 2026, the Company was not required to test the covenant as the aggregate amount of the revolving loans
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outstanding and the letters of credit outstanding did not exceed 40 % of the total commitments under the Revolving Credit Facility.
Convertible Notes and Capped Call Transactions
In March 2021, DraftKings Holdings Inc. (formerly DraftKings Inc.), a Nevada corporation (“Old DraftKings”), issued zero-coupon convertible senior notes in an aggregate principal amount of $1,265.0 million, which includes proceeds from the full exercise of the over-allotment option (collectively, the “Convertible Notes”). The Convertible Notes will mature on March 15, 2028 (the “Notes Maturity Date”), subject to earlier conversion, redemption or repurchase. In connection with the issuance of the Convertible Notes, Old DraftKings incurred $17.0 million of lender fees and $1.7 million of debt financing costs, which are being amortized through the Notes Maturity Date. The amortization of debt issuance costs was $0.7 million and $2.0 million for the three and nine months ended September 30, 2026, respectively, and $0.7 million and $2.0 million for the three and nine months ended September 30, 2025, respectively, which is included in Interest income (expense), net on the Company’s condensed consolidated statements of operations. The Convertible Notes represent senior unsecured obligations of Old DraftKings.
The Convertible Notes are convertible at an initial conversion rate of 10.543 shares of the Company’s Class A common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $94.85 per share of the Company’s Class A common stock. The conversion rate is subject to adjustment upon the occurrence of certain specified events and includes a make-whole adjustment upon early conversion in connection with a make-whole fundamental change (as defined in the indenture governing the Convertible Notes). Since the issuance of the Convertible Notes, there have been no changes to the initial conversion price.
Prior to September 15, 2027, the Convertible Notes will be convertible by the holder only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the Notes Maturity Date. Old DraftKings will satisfy any conversion election by paying or delivering, as the case may be, cash, shares of the Company’s Class A common stock or a combination of cash and shares of DraftKings Inc.’s Class A common stock. As of September 30, 2026, no conditions were met to allow for the conversion of the Convertible Notes by any holder.
In connection with the pricing of the Convertible Notes and the exercise of the over-allotment option to purchase additional notes, Old DraftKings entered into privately negotiated capped call transactions (the “Capped Call Transactions”). The Capped Call Transactions have a strike price of $94.85 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Convertible Notes. The Capped Call Transactions have an initial cap price of $135.50 per share, subject to certain adjustments. The Capped Call Transactions are expected generally to reduce potential dilution to the Company’s Class A common stock upon any conversion of Convertible Notes. As the transaction qualifies for equity classification, the net cost of $124.0 million incurred in connection with the Capped Call Transactions was recorded as a reduction to additional paid-in capital on the Company’s condensed consolidated balance sheets.
On August 31, 2026, the Company repurchased $320.0 million aggregate principal amount of the Convertible Notes for $300.4 million. In connection with the repurchase, the Company wrote off $1.0 million of unamortized debt issuance costs allocated to the repurchased Convertible Notes and recognized a net gain on extinguishment of debt of $18.6 million, which is included in Other gain (loss), net on the Company’s condensed consolidated statements of operations. Following the repurchase, $945.0 million aggregate principal amount of the Convertible Notes remained outstanding.
As of September 30, 2026, the Company’s convertible debt balance was $942.1 million, net of unamortized debt issuance costs of $2.9 million. Although recorded at amortized cost on the Company’s condensed consolidated balance sheets, the estimated fair value of the Convertible Notes was $877.6 million and $1,158.7 million as of September 30, 2026 and December 31, 2025, respectively, which was calculated using the estimated or actual bids and offers of the Convertible Notes in an over-the-counter market on the last business day of the period, which is a Level 1 fair value measurement.
As of September 30, 2026, the future principal payments for the Term B-1 Loan, Term B-2 Loan and Convertible Notes were as follows:
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| Years Ending December 31, | |||||
| October 1, 2026 to December 31, 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Indirect Taxes
Taxation of e-commerce is becoming more prevalent and could negatively affect the Company’s business as it primarily pertains to Fantasy and its contestants. The ultimate impact of indirect taxes on the Company’s business is uncertain, as is the period required to resolve this uncertainty. The Company’s estimated contingent liability for indirect taxes represents the Company’s best estimate of tax liability in jurisdictions in which the Company believes taxation is probable. The Company frequently reevaluates its tax positions for appropriateness.
Indirect tax statutes and regulations are complex and subject to differences in application and interpretation. Tax authorities may impose indirect taxes on Internet-delivered activities based on statutes and regulations which, in some cases, were established prior to the advent of the Internet and do not apply with certainty to the Company’s business. The Company’s estimated contingent liability for indirect taxes may be materially impacted by future audit results, litigation and settlements, should they occur. The Company’s activities by jurisdiction may vary from period to period, which could result in differences in the applicability of indirect taxes from period to period.
As of September 30, 2026 and December 31, 2025, the Company’s estimated contingent liability for indirect taxes was $91.8 million and $90.1 million, respectively. The estimated contingent liability for indirect taxes is recorded within other long-term liabilities on the condensed consolidated balance sheets and general and administrative expenses on the condensed consolidated statements of operations.
6.Fair Value Measurements
Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value and nonrecurring fair value measurements are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value as of September 30, 2026 and December 31, 2025 based on the three-tier fair value hierarchy:
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September 30, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Derivative instruments | $ | $ | (1) | $ | $ | ||||||||||||||||||
| Derivative instruments | $ | $ | $ | (3) | $ | ||||||||||||||||||
| Equity securities | (2) | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Other current liabilities | $ | $ | $ | (4) | $ | ||||||||||||||||||
| Other long-term liabilities | (4) | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Derivative instruments | $ | $ | $ | (3) | $ | ||||||||||||||||||
| Equity securities | (2) | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Other current liabilities | $ | $ | $ | (4) | $ | ||||||||||||||||||
| Other long-term liabilities | (4) | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(1)Represents positions held by the Company in connection with its market making activities on various designated contract markets. The Company measures these trading assets at fair value using observable inputs, including quoted prices for identical or similar contracts on designated contract markets, and, accordingly, classifies them as Level 2. Changes in the fair value of trading assets are recorded in Revenue on the condensed consolidated statements of operations. There were no trading assets as of December 31, 2025.
(2)Represents the Company’s non-marketable equity securities, which are classified as Level 2 because the Company measures these assets to fair value using observable inputs for similar investments of the same issuer. The Company has elected the remeasurement alternative for these assets.
(3)Represents the Company’s derivative instruments held in other public and privately held entities. The Company measures these derivative instruments to fair value using option pricing models and, accordingly, classifies these assets as Level 3. There were no new Level 3 derivative instruments sold, purchased by or issued to the Company during the nine months ended September 30, 2026. The table below includes a range and an average weighted by relative fair value of the significant unobservable inputs used to measure these Level 3 derivative instruments to fair value. The key inputs to the valuations are underlying stock price, volatility and risk free rate. A change in these significant unobservable inputs might result in a significantly higher or lower fair value measurement at the reporting date. Changes to fair value of these instruments are recorded in Other gain (loss), net on the condensed consolidated statements of operations.
(4)Represents the contingent consideration issuable to former Sports IQ Analytics Inc. (“SIQ”), Dijon Systems Limited (“Dijon”), Simplebet, Inc. (“Simplebet”) and Railbird equityholders in connection with the acquisition of SIQ, acquisition of Dijon, acquisition of Simplebet and the Railbird Transaction, respectively, upon the achievement of certain performance targets. 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 Company
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classified the contingent consideration liabilities as a Level 3 fair value measurement due to the lack of observable inputs used in the model. The key inputs to the valuations are the projections of future financial results in relation to the business, revenue risk premium, revenue volatility, and operational leverage ratio as well as management judgment regarding the probability of achieving a future performance target. The table below includes a range and an average weighted by relative fair value of the significant unobservable inputs used to measure contingent consideration at fair value. A change in these significant unobservable inputs might result in a significantly higher or lower fair value measurement at the reporting date. Changes to fair value of these instruments are recorded in Other gain (loss), net on the condensed consolidated statements of operations.
| September 30, 2026 | December 31, 2025 | ||||||||||
| Significant Unobservable Inputs of Level 3 Investments | Range (Weighted Average) | Range (Weighted Average) | |||||||||
| Revenue volatility | |||||||||||
| Equity volatility | |||||||||||
| Operational leverage ratio | |||||||||||
The following table provides a roll forward of the recurring Level 3 fair value liability measurements:
| 2026 | 2025 | ||||||||||
| Opening Balance at January 1 | $ | $ | |||||||||
| Fair value adjustment to contingent consideration liabilities | ( | ( | |||||||||
| Settlement of contingent consideration liabilities | ( | ( | |||||||||
| Balance at September 30 | $ | $ | |||||||||
7.Revenue Recognition
Deferred Revenue
The Company includes deferred revenue within accounts payable and accrued expenses and liabilities to users in the condensed consolidated balance sheets. The deferred revenue balances were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Deferred revenue, beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
| Deferred revenue, end of the period | $ | $ | $ | $ | |||||||||||||||||||
| Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
Deferred revenue primarily represents contract liabilities related to the Company’s obligation to transfer future value in relation to in-period transactions in which the Company has received consideration. These obligations are primarily related to incentive programs and wagered amounts associated with unsettled or pending outcomes that fluctuate based on the volume of activity. Such obligations are recognized as liabilities when awarded to users and are recognized as revenue when those liabilities are later resolved, often within the following period.
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Revenue Disaggregation
We disaggregate revenue from contracts with customers by Sports (as defined below), iGaming and Other (as defined below), as we believe it best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Disaggregation of revenue for the three and nine months ended September 30, 2026 and 2025 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Sports | $ | $ | $ | $ | |||||||||||||||||||
| iGaming | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total Revenue | $ | $ | $ | $ | |||||||||||||||||||
8.Stock-Based Compensation
The Company has historically issued three types of stock-based compensation: time-based awards, long-term incentive plan (“LTIP”) awards and performance-based stock compensation plan (“PSP”) awards. Time-based awards are equity awards that tie vesting to length of service with the Company and generally vest over a four-year period in annual and/or quarterly installments. LTIP awards are performance-based equity awards that are used to establish longer-term performance objectives and incentivize management to meet those objectives. PSP awards are performance-based equity awards which establish performance objectives related to or particular fiscal years. LTIP awards generally vest when revenue and/or Adjusted EBITDA targets are achieved, among other conditions, while PSP awards generally vest upon achievement of revenue and/or Adjusted EBITDA targets and have a range of payouts, among other conditions. All stock-based compensation awards expire to ten years after the grant date thereof.
The following table shows restricted stock unit (“RSU”) and stock option activity for the nine months ended September 30, 2026:
| Options | RSUs | Total | Weighted Average Exercise Price of Options | Weighted Average Fair Market Value of RSUs | |||||||||||||||||||||||||||||||||||||
| Time-Based | PSP | LTIP | |||||||||||||||||||||||||||||||||||||||
| Outstanding at December 31, 2025 | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Granted | |||||||||||||||||||||||||||||||||||||||||
| Exercised options / vested RSUs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
| Change in awards due to performance multiplier | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Forfeited | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | |||||||||||||||||||||||||||||||||||||||
As of September 30, 2026, total unrecognized stock-based compensation expense of $587.1 million related to granted, and unvested, stock-based compensation arrangements is expected to be recognized over a weighted-average period of 2.7 years.
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The following table shows stock-based compensation expense for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| Options | RSUs | Total | Options | RSUs | Total | ||||||||||||||||||||||||||||||
Time-Based (1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
PSP (2) | |||||||||||||||||||||||||||||||||||
LTIP (2) | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| Options | RSUs | Total | Options | RSUs | Total | ||||||||||||||||||||||||||||||
Time-Based (1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
PSP (2) | |||||||||||||||||||||||||||||||||||
LTIP (2) | ( | ( | |||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(1) Time-based awards vest and are expensed over a defined service period.
(2) PSP and LTIP awards vest based on defined performance criteria and are expensed based on the probability of achieving such criteria.
9.Income Taxes
The Company’s income tax provision (benefit) for the three and nine months ended September 30, 2026 and 2025 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Income tax provision (benefit) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
The effective tax rates for the three months ended September 30, 2026 and 2025 were negative 1.5 % and 4.5 %, respectively, and the effective tax rates for the nine months ended September 30, 2026 and 2025 were negative 2.2 % and 4.2 %, respectively. The difference between the Company’s effective tax rates for the three and nine months ended September 30, 2026 and 2025 and the U.S. statutory tax rate of 21% was primarily due to a valuation allowance related to the Company’s deferred tax assets, offset partially by current state tax and current foreign tax. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized.
10.Segment Information
The Company has one consolidated reportable segment. This segment provides users with Sportsbook, iGaming, Fantasy, Lottery, prediction markets, and other online offerings as well as the design, development and licensing of sports betting and casino gaming software for its Sportsbook and iGaming offerings. The Company drives revenue primarily in North America and manages the business activities on a consolidated basis.
The determination of reportable operating segments is based on the Chief Operating Decision Maker’s (“CODM”) use of financial information provided for the purposes of assessing performance and making operating decisions. The Company’s CODM is its Co-founder and Chief Executive Officer. The CODM uses net income (loss) to allocate resources and assess the performance of the Company by comparing actual results to historical results and previously forecasted financial information and the allocation of budget among cost of revenues, sales and marketing, product and technology, and general and administrative expenses. The measure of segment assets is reported on the condensed consolidated balance sheets as Total assets.
The accounting policies of the Company’s consolidated segment are the same as those described in “Note 2 – Summary of Significant Accounting Policies and Practices.” Any intercompany revenues or expenses are eliminated in consolidation.
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The following table presents revenue, significant expenses, and net income (loss) for our consolidated segment:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of revenue: Gaming taxes | |||||||||||||||||||||||
Cost of revenue: Other (1) | |||||||||||||||||||||||
Adjusted sales and marketing expenses (2) | |||||||||||||||||||||||
Adjusted product and technology expenses (2) | |||||||||||||||||||||||
Adjusted general and administrative expenses (2) | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Interest (income) expense, net | |||||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Income tax provision (benefit) | ( | ( | |||||||||||||||||||||
Other segment items (3) | ( | ( | ( | ( | |||||||||||||||||||
| Consolidated net income (loss) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(1)Cost of revenue: Other includes all cost of revenue, other than gaming tax, presented in the condensed consolidated statements of operations, adjusted for the impact of depreciation and amortization and stock-based compensation.
(2)These items represent the respective line items in the condensed consolidated statements of operations, adjusted for the impact of depreciation and amortization; stock-based compensation; transaction-related costs; certain litigation, settlement and related costs; certain advocacy and other related legal expenses; and other expenses, as further described below.
11.Earnings (Loss) Per Share
The computation of earnings (loss) per share and weighted-average shares of the Company’s Class A common stock outstanding for the periods presented are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Basic and diluted weighted-average common shares outstanding | |||||||||||||||||||||||
| Earnings (loss) per share attributable to common stockholders: | |||||||||||||||||||||||
| Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
There were no preferred or other dividends declared for the three and nine months ended September 30, 2026. The below table includes the total securities potentially dilutive for the three and nine months ended September 30, 2026 and 2025, which have been excluded from the computation of basic and diluted earnings (loss) per share.
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Class A common stock resulting from exercise of all warrants | |||||||||||||||||||||||
| Stock Options and RSUs | |||||||||||||||||||||||
| Convertible notes | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
The Company has contingent consideration arrangements related to business combinations as disclosed in “Note 3 – Business Combinations.” Certain potential shares associated with these arrangements have been excluded from the computations and tables above as they are contingently issuable, and the contingency to which the issuance relates was not met at the end of the reporting period.
12.Related-Party Transactions
Equity Method Investments
The Company has committed to invest up to $17.5 million in DBDK Venture Fund I, LP, in which the Company holds a 28.6 % ownership interest, and $21.0 million in DBDK Fund II, LP, in which the Company holds a 35.0 % ownership interest. Both funds are Delaware limited partnerships and are both managed by Drive by DraftKings, LLC (“DBDK”). As of September 30, 2026, the Company had invested a total of $14.7 million and $3.7 million of the total commitment in DBDK Venture Fund I, LP and DBDK Fund II, LP, respectively. The Company also provides office space and general operational support to DBDK, which is partially owned by DKFS, LLC, an equity-method affiliate in which the Company has a 49.9 % membership interest, in exchange for services-in-kind. The operational support is primarily general and administrative services.
Aircraft
On each of March 30, 2026 and 2025, the Company renewed a one-year 0.6 one-year 0.1 0.3
On August 11, 2026, the Company entered into an agreement to purchase the aircraft from an entity solely owned by Mr. Robins for approximately $25.5 million in cash, based on a valuation established by an independent third-party appraisal (the “Aircraft Purchase”), less certain aircraft expenditures that the Company previously incurred and was entitled to recoup from the selling entity in connection with the Aircraft Purchase. The audit committee of the Company’s Board of Directors and the Board of Directors approved the Aircraft Purchase and the Aircraft Leases, based, among other considerations, on the requirements of certain executive officers’ security programs that such executives and their respective family members travel by private aircraft and the audit committee’s and Board of Directors’ determination, among other things, that the arrangement provides greater efficiency and flexibility and better supports safety, security, confidentiality and privacy. In connection with the Aircraft Purchase, the Aircraft Lease was terminated.
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13.Commitments and Contingencies
Contractual Obligations and Contingencies
The Company is a party to several non-cancelable contracts with vendors under which the Company is obligated to make future minimum payments under the terms of these contracts as follows:
| Years Ending December 31, | |||||
| From October 1, 2026 to December 31, 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Surety Bonds
As of September 30, 2026, the Company has been issued $510.0 million in surety bonds at a combined annual premium cost of 0.45 %, which are held for certain regulators’ use and benefit in order for the Company to satisfy state license requirements. There have been no claims against such bonds, and the likelihood of future claims is remote.
Stock Repurchase Program
On July 30, 2024, the Company’s Board of Directors authorized the repurchase of an aggregate of up to $1.0 billion of the Company’s Class A common stock (the “Stock Repurchase Program”). On November 6, 2025, our Board of Directors approved a $1.0 billion increase to our existing stock repurchase authorization, which increased the aggregate share repurchase authorization to $2.0 billion of our Class A common stock. Under the Stock Repurchase Program, the Company may make repurchases of its Class A common stock through open market purchases, privately negotiated transactions or other transactions in accordance with applicable securities laws, subject to market conditions and other factors. The Company’s Stock Repurchase Program does not require it to acquire any specific number or amount of its Class A common stock and may be terminated at any time. The Company may enter into Rule 10b5-1 plans from time to time to facilitate repurchases of its Class A common stock in connection with its Stock Repurchase Program.
The Company did not repurchase any shares during the three months ended September 30, 2026, compared to 1.6 million shares for $71.2 million during the three months ended September 30, 2025. The Company repurchased 5.5 million shares and 8.2 million shares for $154.2 million and $314.0 million during the nine months ended September 30, 2026 and 2025, respectively, under the Stock Repurchase Program.
Contingencies
The Company is involved in a number of legal proceedings (including those described below) concerning matters arising in connection with the conduct of its business activities. These proceedings are at varying stages, and many of these proceedings seek an indeterminate amount of damages. The Company regularly evaluates the status of the legal proceedings in which it is involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate. If accruals are not appropriate, the Company further evaluates each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made.
For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties involved. Unless otherwise indicated, for each of the matters described below, management does not believe that, despite the potential for significant damages, and based on currently available information, the outcome of any specific matter will have a material adverse effect on the Company’s financial condition, though an
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outcome of a specific matter could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.
Attorney General of Texas
On January 19, 2016, the Texas Attorney General issued an opinion letter that “odds are favorable that a court would conclude that participation in paid daily fantasy sports leagues constitutes illegal gambling” under Texas law. In response to the opinion letter, the Company sued the Texas Attorney General on March 4, 2016 in Dallas County, Texas. On August 5, 2026, DraftKings and FanDuel voluntarily dismissed the lawsuit without prejudice.
Winview I
On July 7, 2021, Winview Inc., a Delaware corporation (“Winview”) filed suit against the Company in the United States District Court for the District of New Jersey. In the complaint, Winview alleges that the Company infringes two patents: U.S. Patent No. 9,878,243 (“the ’243 Patent”), entitled “Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming”, and U.S. Patent No. 10,721,543 (“the ’543 Patent”), entitled “Method of and System for Managing Client Resources and Assets for Activities on Computing Devices”. The allegations based on the ’243 Patent are directed to Sportsbook, and the allegations based on the ’543 Patent are directed to both Sportsbook and Fantasy.
On July 28, 2021, Winview filed an amended complaint, in which it alleges that the Company infringes two additional patents: U.S. Patent No. 9,993,730 (“the ’730 Patent”), entitled “Methodology for Equalizing Systemic Latencies in Television Reception in Connection with Games of Skill Played in Connection with Live Television Programming”, and U.S. Patent No. 10,806,988 (“the ’988 Patent”), entitled “Method Of and System For Conducting Multiple Contests of Skill with a Single Performance”. The allegations based on the ’730 Patent are directed at Sportsbook, and the allegations based on the ’988 Patent are directed at Fantasy.
On November 15, 2021, Winview filed a second amended complaint (the “SAC”), adding as defendants DK Crown Holdings Inc. and Crown Gaming Inc., a Delaware corporation, which are wholly-owned subsidiaries of the Company. The SAC, among other allegations, repeats the allegations of the first amended complaint that the defendants infringe the ’243 Patent, the ’543 Patent, the ’730 Patent, and the ’988 Patent. On December 15, 2021, the Company filed a motion to dismiss the SAC, arguing that Winview failed to state a claim for direct infringement of the ’543 Patent and the ’730 Patent, and for willful, induced, and contributory infringement for all four asserted patents.
On August 3, 2022, the Company filed a petition for inter partes review with the Patent Trial and Appeal Board (“PTAB”) challenging the validity of the ’243 Patent. On July 25, 2022, FanDuel filed petitions for inter partes review (“IPRs”) with the PTAB challenging the validity of the ’543 and ’730 Patents. On September 20, 2022, the court entered an order staying the pending motion to dismiss and staying all discovery pending final resolution of the petition for inter partes review through a final written decision. On February 15, 2023, the district court administratively terminated the lawsuit pending the PTAB’s final written decision. On January 29, 2024, the PTAB issued final written decisions in the IPRs, finding unpatentable all challenged claims of the ’243, ’543, and ’730 Patents. On February 16, 2024, the parties jointly requested that the case remain administratively terminated. On February 20, 2024, the court granted the request.
On March 29, 2024, Winview filed a notice of appeal in the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”), challenging the PTAB’s final written decisions in the IPRs. On April 11, 2024, the parties jointly requested that the district court litigation remain administratively terminated until at least the Federal Circuit issues its mandate regarding Winview’s appeals. On April 15, 2024, the district court ordered the case to remain administratively terminated. On June 26, 2024, Winview and DraftKings filed a joint stipulation of voluntary dismissal of Winview’s appeal. On June 28, 2024, the Federal Circuit ordered Winview’s appeal dismissed.
On December 17, 2024, the court dismissed all of Winview’s claims with respect to U.S. Patent Nos. 9,878,243 and 9,930,730. On January 6, 2025, defendants filed a motion to dismiss Winview’s direct infringement claims for U.S. Patent No. 10,721,543 as well as Winview’s claim for willful, induced, and contributory infringement for the two remaining patents-in-suit. On July 11, 2025, the court granted the Company’s motion to dismiss without prejudice. On August 11, 2025, Winview filed an amended complaint alleging infringement of different claims of the ’543 and ’988 Patents, and alleging infringement by DK Sportsbook, Fantasy, DK Casino, Pick6, and DK Horse. On September 26, 2025, DraftKings filed a motion to dismiss Winview’s direct infringement claims for the ’543 Patent and Winview’s claim for willful, induced, and contributory infringement for the two remaining patents-in-suit.
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On January 16, 2026, DraftKings filed petitions for IPRs under 35 U.S.C. § 312 and 37 C.F.R. § 42.104 for U.S. Patent No. 11,451,883 and U.S. Patent No. 11,338,189, which relate to the ’543 Patent and ’988 Patent, respectively. On March 17, 2026, the court granted-in-part and denied-in-part the Company’s motion to dismiss. The court denied the Company’s motion to dismiss the direct infringement claims of the ’543 Patent but granted with prejudice the motion to dismiss the willful infringement and indirect infringement claims as to the ’543 Patent and ’988 Patent. The infringement claims of the ’543 Patent and ’988 Patent will therefore proceed. On March 31, 2026, DraftKings filed its counterclaims, answer, and affirmative defenses to Winview’s Third Amended Complaint. On April 14, 2026, Winview filed its answer to DraftKings’ counterclaims.
The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, the Company may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that the Company currently offers.
The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
AG 18, LLC d/b/a Arrow Gaming
On August 19, 2021, AG 18, LLC d/b/a Arrow Gaming (“Arrow Gaming”) filed a complaint against the Company in the United States District Court for the District of New Jersey alleging that the Company’s Fantasy and iGaming offerings infringe four patents. On October 12, 2021, Arrow Gaming filed an amended complaint to add one additional patent. The following U.S. Patents were asserted against one or both of the Company’s Fantasy and iGaming offerings in the amended complaint: (1) U.S. Patent No. 9,613,498 (“the ’498 Patent”), entitled “Systems and Methods For Peer-to-Peer Gaming”; (2) U.S. Patent No. 9,978,205 (“the ’205 Patent”), entitled “Location Based Restrictions on Networked Gaming”; (3) U.S. Patent No. 10,497,220, entitled “Location Based Restrictions on Networked Gaming”; (4) U.S. Patent No. 10,614,657 (“the ’657 Patent”), entitled “Location Based Restrictions on Networked Gaming”; and (5) U.S. Patent No. 11,024,131, entitled “Location Based Restrictions on Networked Gaming” (collectively, the “Arrow Gaming Patents”).
On November 10, 2021, the Company answered the complaint and filed counterclaims (the “Counterclaims”). In the Counterclaims the Company sought, among other things, a declaratory judgment that the Arrow Gaming Patents are invalid. On December 1, 2021, Arrow Gaming answered the Counterclaims. On December 20, 2021, Arrow Gaming filed a second amended complaint adding new allegations with respect to alleged willful infringement. On January 21, 2022, the Company filed a motion to dismiss plaintiff’s second amended complaint.
Between August 22, 2022 and August 30, 2022, the Company filed petitions for IPRs with the PTAB challenging the validity of each of the Arrow Gaming Patents. On March 14, 2023, the PTAB granted institution of all IPRs. On March 12 and 13, 2024, the PTAB issued final written decisions in all pending IPRs finding all claims that were asserted in the litigation unpatentable. Only two claims were not found unpatentable: claim 18 of the ’205 Patent and claim 11 of the ’657 Patent. Neither of these claims were asserted in the litigation brought by Arrow Gaming.
On May 14, 2024, Arrow Gaming filed a Notice of Appeal of the IPR directed to the ’498 Patent. On July 10, 2024, DraftKings filed a Notice of Appeal of the IPR directed to the ’205 Patent challenging the PTAB’s final written decision as to claim 18 of the ’205 Patent. On April 15, 2026, the Federal Circuit issued a summary affirmance upholding the PTAB’s final written decision invalidating the asserted claims of the ’498 Patent. On May 6, 2026, the Federal Circuit issued an affirmance in the DraftKings appeal of the IPR directed to the ’205 Patent, upholding the PTAB’s final written decision holding that claim 18 of the ‘205 Patent had not been proven to be unpatentable. On April 28, 2026, Arrow Gaming filed a motion for voluntary dismissal of the lawsuit with prejudice.
Diogenes Ltd. & Colossus (IOM) Ltd.
On December 1, 2021, Diogenes Ltd. & Colossus (IOM) Ltd. (“Colossus”), filed a complaint against the Company in the United States District Court for the District of Delaware alleging that the Company’s Sportsbook offering infringes seven of its patents. The following U.S. Patents, each entitled “Wagering apparatus, methods and systems”, are asserted against the Company’s Sportsbook offering in the complaint: U.S. Patent No. 8,721,439 (“the ’439 patent”); U.S. Patent No. 9,117,341 (“the ’341 patent”); U.S. Patent No. 9,275,516 (“the ’516 patent”); U.S. Patent No. 9,424,716 (“the ’716 patent”); U.S. Patent No. 9,704,338 (“the ’338 patent”); U.S. Patent No. 10,970,969 (“the ’969 patent”); and U.S. Patent No. 10,997,822 (“the ’822 patent”).
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On January 24, 2022, the Company filed a motion to dismiss the original complaint. On February 7, 2022, Colossus filed an amended complaint (the “Amended Complaint”) to, among other things, assert one additional patent against the Company, U.S. Patent No. 11,200,779 (“the ’779 patent”). The patents asserted by Colossus are collectively referred to as the “Colossus Patents.”
The Company filed a motion to dismiss the Amended Complaint on February 22, 2022. On July 18, 2022, Magistrate Judge Burke issued a report and recommendation (the “Report and Recommendation”) that the motion to dismiss be granted-in-part and denied-in-part. On August 26, 2022, district court Judge Noreika adopted the Report and Recommendation of Magistrate Judge Burke regarding the motion to dismiss. On December 27, 2022, the Company filed an Answer to the Amended Complaint, including certain affirmative defenses. On January 17, 2023, Colossus filed a motion to strike the affirmative defense of unenforceability from the Company’s Answer. On February 7, 2023, the Company filed an Amended Answer and Counterclaims to the Amended Complaint, and also filed a response to Colossus’ motion to strike. On February 28, 2023, Colossus filed another motion to strike DraftKings’ inequitable conduct affirmative defense and counterclaim. Magistrate Judge Burke held a hearing on Colossus’ motion on June 6, 2023 and subsequently issued a report and recommendation (the “Second Report and Recommendation”) that the motion be denied in part and granted in part. On August 2, 2023, Judge Noreika overruled Colossus’ objections and adopted the Second Report and Recommendation.
Between November 29, 2022, and February 7, 2023, the Company filed petitions for inter partes review with the PTAB challenging the validity of the Colossus Patents. The PTAB granted institution of IPRs for each of the ’341 patent, ’969 patent, and the ’822 patent. The PTAB denied institution of IPR for each of the ’516 patent, ’716 patent, ’338 patent and the ’779 patent. On September 11, 2023, the Company filed a request for Director Review of the PTAB’s decision not to institute review in the IPR for the ’779 patent. On November 7, 2023, the Director of the U.S. Patent and Trademark Office delegated Director Review of the PTAB’s institution decision in the IPR for the ’779 Patent to the Delegated Review Panel (“DRP”) to determine whether to grant rehearing. On February 21, 2024, the DRP issued a decision vacating the PTAB’s denial of institution of the IPR directed to the ’779 Patent and instructing the PTAB to reconsider institution. On May 15, 2024, the PTAB instituted the IPR directed to the ’779 Patent. On May 9, 2025, the PTAB issued a final written decision finding all claims of the ’779 Patent that were asserted in the litigation unpatentable. On July 7, 2025, Colossus filed a Notice of Appeal in the Federal Circuit, challenging the PTAB’s final written decision in the IPR directed to the ’779 Patent. On October 17, 2025, Colossus filed its opening brief in the appeal, on January 26, 2026, the Company filed its responsive brief in the appeal, and on April 28, 2026, Colossus filed its reply brief.
On March 15, 2024, the parties entered into a partial settlement agreement, in which the parties agreed to, among other things: (1) dismissal with prejudice of the claims relating to the ’439 patent; ’341 patent; ’516 patent; ’716 patent; ’338 patent; ’969 patent; and the ’822 patent; and (2) DraftKings’ withdrawal of its IPRs with respect to the ’341 Patent, the ’969 Patent, and the ’822 Patent. The dismissal and withdrawal both occurred on March 18, 2024. Only the ’779 Patent remains pending in the district court litigation. The parties have stipulated to a stay of the district court litigation pending resolution of the IPR directed to the ’779 Patent.
The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, the Company may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that the Company currently offers.
The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Steiner
Nelson Steiner filed suit against the Company and FanDuel Inc. in Florida state court on November 9, 2015. The action was subsequently transferred to In Re: Daily Fantasy Sports Litigation (Multi-District Litigation) (the “MDL”), and Mr. Steiner’s action was consolidated into the MDL’s amended complaint, which, in February 2016, consolidated numerous actions (primarily purported class actions) filed against the Company, FanDuel, and other related parties in courts across the United States. By June 23, 2022, the MDL was resolved, except for Mr. Steiner’s action, and the court officially closed the MDL docket on July 8, 2022.
Mr. Steiner brought this action as a concerned citizen of the state of Florida alleging that, among other things, defendants’ daily fantasy sports contests are illegal gambling under the state laws of Florida and sought disgorgement of “gambling losses”
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purportedly suffered by Florida citizens on behalf of the state. On June 23, 2022, the MDL court remanded Mr. Steiner’s action to the Circuit Court for Pinellas County, Florida.
On September 9, 2025, DraftKings and FanDuel jointly moved to dismiss Steiner’s amended complaint. On November 19, 2025, the circuit court granted the motion to dismiss the amended complaint with prejudice.
Shareholder Derivative Litigation Related to Marketplace
On May 31, 2023, the first of three substantially similar, putative shareholder derivative actions was filed in Nevada state court by an alleged shareholder of the Company. On October 29, 2024, the court entered a stipulated order consolidating the three actions under the caption In re DraftKings Inc. Stockholder Derivative Litigation and appointed lead counsel. On December 23, 2024, the plaintiffs filed a consolidated amended complaint. The amended complaint purports to assert claims on behalf of the Company against certain senior officers and members of the Board of Directors of the Company based primarily on allegations that the defendants caused or allowed the Company to sell NFTs in violation of applicable law. The amended complaint also alleges that certain individuals are liable for trading in Company stock based on non-public information about its NFT business. The amended complaint seeks unspecified compensatory damages on the Company’s behalf, changes to corporate governance and internal procedures, costs and attorney’s fees, and other unspecified relief.
On February 21, 2025, the defendants moved to dismiss the amended complaint. On September 12, 2025, the court entered an order granting in part and denying in part the defendants’ motion to dismiss on the merits pursuant to Rule 12(b)(5). The court dismissed without prejudice the plaintiffs’ first, second, and fifth causes of action—asserting breach of fiduciary duty, corporate waste, and insider trading—under Rule 12(b)(5). The court denied without prejudice the defendants’ motion under Rule 12(b)(5) as to the plaintiffs’ third and fourth causes of action—alleging the sale of unregistered securities and transacting business as an unlicensed broker-dealer. The court deferred consideration of the defendants’ separate motion to dismiss for failure to plead demand futility under Rule 23.1, and granted the plaintiffs leave to file an amended complaint within thirty days of entry of the order. After plaintiffs declined to replead the previously dismissed claims, on November 17, 2025, the defendants renewed their motion to dismiss for failure to plead demand futility under Rule 23.1. On February 3, 2026, the court issued an oral ruling, which was confirmed by a subsequent written order entered on March 3, 2026, dismissing the remaining claims with prejudice. The plaintiffs did not file a notice of appeal by the April 6, 2026, deadline.
Scanlon
On December 8, 2023, plaintiffs Melissa Scanlon and Shane Harris, individually and on behalf of others similarly situated, filed a purported class action lawsuit against DraftKings in Middlesex County Superior Court of Massachusetts. Among other things, plaintiffs allege that the Company’s promotion that offered new customers an opportunity to earn up to 1,000 in site credits, and related advertisements, were: (1) unfair or deceptive practices in violation of Massachusetts General Laws (“M.G.L.”) c. 93A, §§ 2, 9; and (2) untrue and misleading advertising in violation of M.G.L. c. 266, § 91. The plaintiffs are seeking, among other things, injunctive relief, actual damages, double or treble damages, and attorneys’ fees.
On March 26, 2024, the case was transferred to the Business Litigation Session of the Massachusetts Superior Court. On January 29, 2024, DraftKings filed a motion to dismiss all of plaintiffs’ claims. On August 19, 2024, the court denied the motion to dismiss. On October 10, 2025, DraftKings served its motion for summary judgment. On February 18, 2026, the court issued an order denying DraftKings’ motion for summary judgment on the Chapter 93A claim (Count I) but granted the motion on the Chapter 266 claim (Count II). On March 10, 2026, plaintiffs filed a motion for reconsideration of the Order with respect to Count II, which the court denied on April 9, 2026.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
McAfee
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On June 10, 2024, plaintiff Matthew McAfee, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against DraftKings in the Hamilton County Superior Court, State of Indiana. Among other things, plaintiff alleges that those customers who had winning bets placed and accepted on the October 24, 2023 Lakers versus Nuggets basketball game that were subsequently canceled by DraftKings for obvious error were not timely canceled and should have been paid. Plaintiff brings claims for: (1) Indiana Deceptive Consumer Sales Act – Incurable Deceptive Act; (2) Indiana Deceptive Consumer Sales Act – Uncured Deceptive Act; and (3) breach of contract. Plaintiff seeks, among other things, actual and statutory damages, treble and exemplary damages, interest, and attorney fees and costs.
On July 12, 2024, DraftKings removed the matter to the United States District Court for the Southern District of Indiana. On August 14, 2024, DraftKings filed a motion to dismiss. On February 7, 2025, the court granted DraftKings’ motion to dismiss as to plaintiff’s DCSA claims and denied DraftKings’ motion to dismiss as to plaintiff’s breach of contract claim. The court also held that DraftKings may amend its response to plaintiff’s motion for class certification up until February 24, 2025. On February 12, 2025, McAfee filed a motion for leave to file a first amended complaint. On May 9, 2025, the court denied the motion to amend.
On November 20, 2024, plaintiff filed a motion for class certification, and on June 11, 2025, plaintiff filed an amended motion for class certification. On December 9, 2025, the court granted the class certification motion. On January 20, 2026, the court entered an order directing the parties to provide class notice within thirty days of the order. The parties provided class notice.
On October 21, 2025, plaintiff filed a motion for summary judgment. On September 22, 2026, the court entered its order granting summary judgment in favor of DraftKings. On October 21, 2026, plaintiff filed his notice of appeal.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Youngs
On January 7, 2025, plaintiff Matthew Youngs, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc., Crown NJ Gaming Inc. dba DraftKings, DGMB Casino LLC and Resorts Atlantic City in the United States District Court, District of New Jersey. Among other things, plaintiff alleges that the Company’s “risk-free” and “no sweat” promotions, and the promotion that offered new customers an opportunity to earn up to 1,000 site credits as a sportsbook deposit match, as well as promotions that offered site credits in connection with a casino deposit match, were unfair, unconscionable, and misleading. The plaintiff’s complaint, as amended, asserts claims for violation of the New Jersey Consumer Fraud Act (“CFA”), intentional misrepresentation, unjust enrichment, and conversion. Plaintiff seeks compensatory damages, punitive damages, attorney fees and costs. Plaintiff seeks to certify a nationwide class of anyone who participated in the casino deposit match promotion and lost part or all of their initial deposit (with subclasses for New Jersey, Connecticut, Pennsylvania, Michigan, and West Virginia). Plaintiff also seeks a statewide class of (i) anyone in New Jersey who allegedly opted into the “risk free” or “no sweat” promotion and lost a bet; and (ii) anyone in New Jersey who opened an account and deposited money while in New Jersey in response to the 1,000 new customer sportsbook deposit match promotion.
On March 27, 2025, DraftKings filed a motion to dismiss the complaint. In response to the motion to dismiss, on April 17, 2025, plaintiff Matthew Youngs and a second plaintiff (Jason Lombardozzi), individually and on behalf of all others similarly situated, filed a first amended purported class action complaint against DraftKings Inc. and Crown NJ Gaming Inc. dba DraftKings. In the amended complaint, the plaintiffs removed DGMB Casino and Resorts Atlantic as defendants and removed claims of negligence. In the amended complaint, the plaintiffs added new CFA claims alleging that (i) the casino deposit match was unconscionable because it inculcated gaming addiction and (ii) the Company engaged in unconscionable conduct by targeting customers with casino deposit match promotions after such customers had become addicted to gaming. The court terminated the defendants’ motion to dismiss as moot due to the plaintiffs filing an amended complaint. On May 22, 2025, DraftKings filed a motion to dismiss the amended complaint. On July 23, 2025, the court granted the motion to dismiss with prejudice regarding the unjust enrichment claim and dismissing without prejudice all other claims. On August 13, 2025, plaintiffs filed a second amended complaint: dismissing Lombardozzi as a plaintiff and added a new plaintiff (Charles
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Thompson); dismissing their CFA claims alleging that the casino deposit match promotions allegedly inculcated gaming or were otherwise unconscionable; and adding two new intentional misrepresentation claims related to the “risk free” and “no sweat promotions,” and new customer sportsbook deposit match promotion. Plaintiffs seek to certify nationwide classes of persons who opted into each of the promotions at issue, as well as a New Jersey subclass.
On September 10, 2025, DraftKings filed a motion to dismiss the second amended complaint. On November 19, 2025, the district court granted the motion in part and denied it in part, allowing plaintiffs’ CFA and common law fraud claims as to the “risk free” promotion to proceed, as well as an equitable fraud claim concerning the casino deposit match promotion. DraftKings filed its answer to the second amended complaint on December 17, 2025.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
James Beyer, Collin Smothers, Mateen Zafer and Corey Davis
On January 8, 2025, plaintiffs James Beyer, Collin Smothers, Mateen Zafer and Corey Davis, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc., Crown IL Gaming LLC dba DraftKings, Northside Crown Gaming LLC, and Casino Queen Inc. in the Circuit Court of Cook County, Illinois Law Division. Among other things, plaintiffs allege that the Company’s “risk-free” and “no sweat” promotions, and the promotion that offered new customers an opportunity to earn up to 1,000 site credits as a deposit match, were unfair and misleading. Plaintiffs also allege that DraftKings targets underage users with its advertising and by allowing them to participate in daily fantasy sports contests in order to inculcate gaming habits. Plaintiffs bring claims for violation of the Illinois Consumer Fraud and Deceptive Practices Act, intentional misrepresentation, fraudulent inducement, unjust enrichment, civil conspiracy, and declaratory relief. Plaintiffs seek, among other things, unspecified compensatory damages, punitive damages, attorney fees and costs. Plaintiffs seek to certify a nationwide class of (i) anyone who opted into a DraftKings promotion advertising a “risk-free” or “no sweat” bet and lost their bet (with an Illinois subclass); (ii) anyone who opened an account and deposited money in response to the new customer 1,000 site credit promotion (with an Illinois subclass); and (iii) anyone who opened an account and entered free promotions on DraftKings’ platform before turning twenty-one years old and then placed paid bets on DraftKings after turning twenty-one years old (with an Illinois subclass).
On February 7, 2025, DraftKings removed the complaint to the United States District Court, Northern District of Illinois, Eastern Division. On April 4, 2025, DraftKings filed a motion to dismiss. In response, on May 9, 2025, plaintiffs filed their first amended complaint (the “First Amended Complaint”). On June 12, 2025, DraftKings filed a motion to dismiss the First Amended Complaint. Plaintiffs filed their Opposition to the Motion to Dismiss on July 9, 2025, and DraftKings filed its reply on July 28, 2025.
On August 8, 2025, the court ordered the parties to provide a supplemental brief setting forth the basis for the court’s subject matter jurisdiction under the Class Action Fairness Act in light of the mandatory “local controversy exception” contained in 28 U.S.C. §1332(d)(4)(A). On November 20, 2025, the district court ruled that it had jurisdiction under the Class Action Fairness Act. On November 25, 2025, the district court denied DraftKings’ motion to dismiss the First Amended Complaint. On December 23, 2025, DraftKings filed a motion to certify an interlocutory appeal pursuant to 28 U.S.C. § 1292(b) on the issue of whether a mobile app, or its specific features (e.g., the app interface), can be a “product” for purposes of Illinois product liability law. On February 26, 2026, the district court denied DraftKings’ motion to certify. On March 26, 2026, DraftKings filed a motion for reconsideration of the district court’s order denying certification, and on April 1, 2026, the district court denied DraftKings’ motion for reconsideration. On June 1, 2026, the district court referred the case to a magistrate judge for discovery supervision.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome
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in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Clara De Leon and Eric Mirsberger Jr.
On January 22, 2025, plaintiffs Clara De Leon and Eric Mirsberger Jr., individually and on behalf of all others similarly situated, filed a purported class action complaint (the “Original Complaint”) against DraftKings Inc. and Crown NY Gaming Inc. in the United States District Court for the Southern District of New York. Among other things, plaintiffs allege that the Company’s “risk-free” and “no sweat” promotions, and the promotion that offered new customers an opportunity to earn up to 1,000 site credits as a deposit match, were unfair and misleading. Plaintiffs also allege that DraftKings targets players with gaming addiction issues, including by pairing players who bet large amounts of money with VIP hosts who, plaintiffs allege, are trained to encourage customers to place frequent and large bets. Plaintiffs bring claims for violation of the New York General Business Law sections 349 and 350, negligence, intentional misrepresentation, fraudulent inducement, unjust enrichment, and declaratory relief. Plaintiffs seek, among other things, unspecified compensatory damages, punitive damages, attorney fees and costs. Plaintiffs seek a nationwide class of (i) anyone who allegedly opted into the “risk free” or “no sweat” promotion and lost a bet (with a New York subclass); (ii) anyone who allegedly opened an account and deposited money in response to the new customer 1,000 site credit promotion (with a New York subclass); and (iii) anyone who was allegedly enticed by DraftKings’ VIP hosts to bet beyond their means (with a New York subclass). Plaintiffs also seek a declaration that DraftKings has breached agreements with Apple and Google relating to their respective app stores.
On April 8, 2025, DraftKings filed a motion to dismiss. On April 9, 2025, the court ordered plaintiffs to file an amended complaint, if any, and on May 16, 2025, plaintiffs filed an amended putative class action complaint on behalf of Clara De Leon, Eric Mirsberger Jr., Joseph Mitchell, and Edward Mendez (the “First Amended Complaint”). In addition to the claims and theories set forth in the Original Complaint, the First Amended Complaint asserts additional causes of action, including alleged breaches of fiduciary duty and product liability claims based on theories of design defect and failure to warn. On June 20, 2025, DraftKings filed a motion to dismiss. The district court granted the motion to dismiss on December 11, 2025, and entered judgment on February 2, 2026.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Winview II
On February 10, 2025, Winview IP Holdings, LLC (“Winview IP”) filed suit against DraftKings Inc., a Nevada corporation, DK Crown Holdings Inc., Crown Gaming Inc., SBTech US Inc., and SBTech (Global) Ltd. in the United States District Court for the District of New Jersey. In the complaint, Winview IP alleges that the defendants infringe nine patents: U.S. Patent No. 11,185,770 (“the ’770 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S. Patent No. 11,235,237 (“the ’237 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S. Patent No. 11,338,189 (“the ’189 Patent”), entitled “Method of and system for conducting multiple contests of skill with a single performance,” U.S. Patent No. 11,451,883 (“the ’883 Patent”), entitled “Method of and system for managing client resources and assets for activities on computing devices,” U.S. Patent No. 11,678,020 (“the ’020 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S. Patent No. 11,736,771 (“the ’771 Patent”), entitled “Methodology for equalizing systemic latencies in television reception in connection with games of skill played in connection with live television programming,” U.S. Patent No. 11,918,880 (“the ’880 Patent”), entitled “Method of and system for conducting multiple contests of skill with a single performance,” U.S. Patent No. 11,951,402 (“the ’402 Patent”), entitled “Method of and system for conducting multiple contests of skill with a single performance,” and U.S. Patent No. 12,005,349 (“the ’349 Patent”), entitled “Synchronized gaming and programming.” The allegations based on: the ’770 Patent are directed to DK Sportsbook, DK Casino, and DK Horse; the ’237 Patent are directed to DK Sportsbook and DK Horse; the ’189 Patent are directed to Fantasy and Pick6; the ’883 Patent are directed to DK Sportsbook, DK Horse, DK Casino, Fantasy, and Pick6; the ’020 Patent are directed to DK Sportsbook, DK Horse, and DK Casino; the ’771 Patent are
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directed to DK Sportsbook, DK Horse, and DK Casino; the ’880 Patent are directed to Fantasy and Pick6; the ’402 Patent are directed to Fantasy and Pick6; and the ’349 Patent are directed to DK Sportsbook, DK Horse, and DK Casino.
On August 18, 2025, DraftKings filed its motion to dismiss Winview’s direct infringement claims of the ’883 patent, all claims against DK Casino and DK Horse, as well as Winview’s claims for willful, induced, and contributory infringement for all nine patents-in-suit.
On January 16, 2026, DraftKings filed petitions for IPRs with the PTAB challenging the validity of the ’883 Patent and the ’189 Patent.
On January 20, 2026, DraftKings informed the district court of the filing of the IPR petitions, and on January 21, 2026, the district court entered an order staying DraftKings’ motion to dismiss pending the final resolution of the IPRs through final written decision of the PTAB. On June 12, 2026, the PTAB denied institution of DraftKings’ IPR petition for the ’189 Patent. On July 2, 2026, the PTAB granted institution of DraftKings’ IPR petition for the ’883 Patent. The PTAB is expected to issue a final written decision on that IPR by July 2, 2027. On September 11, 2026, WinView filed a stipulation of dismissal with prejudice of all asserted claims relating to the ’883 Patent, and on September 14, 2026, the court entered an order dismissing all claims relating to the ’883 patent with prejudice. On October 22, 2026, DraftKings and WinView jointly requested authorization from the PTAB to terminate the IPR for the ’883 Patent.
The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, the Company may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that the Company currently offers.
The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
DC Gambling Recovery LLC v. Caesars et al.
On February 28, 2025, DC Gambling Recovery LLC filed a lawsuit against DraftKings, Caesars, FanDuel, BetMGM, and Fanatics in state court in the District of Columbia. On April 4, 2025, the defendants removed the lawsuit to the United States District Court for the District of Columbia. Plaintiff alleges that the defendants violated the Statute of Anne (D.C. Code § 16-1702), a statute which purportedly allows an individual to recover their betting losses greater than twenty-five dollars from each sportsbook, and should such party fail to sue within three months, the statute purportedly authorizes any person to file suit against the sportsbook to recover the losses (including treble damages). Plaintiff also alleges that the U.S. Supreme Court’s 2018 decision striking down the Professional and Amateur Sports Protection Act (“PASPA”) does not apply to the District of Columbia and, therefore, the Sports Wagering Lottery Amendment Act (“SWLAA”), a 2019 law that legalized sports betting in the District of Columbia, is without any legal force or effect. Plaintiff also alleges that the Statute of Anne permits recovery of betting losses greater than twenty-five dollars even if the SWLAA has legal force or effect. Plaintiff seeks to recover on behalf of all individuals within the District of Columbia that have (i) lost more than $25 at any single time or sitting by sports betting with DraftKings and (ii) not sued to recover those losses within three months of payment to DraftKings.
On May 5, 2025, DraftKings filed a motion to dismiss the complaint. On May 14, 2025, the court granted the District of Columbia’s motion to intervene. On June 16, 2025, plaintiff filed its opposition to defendants’ motions to dismiss; on June 23, 2025, the District of Columbia filed a brief in support of defendants’ motion to dismiss; on July 7 2025, DraftKings filed its reply in support of its motion to dismiss and plaintiff filed its response to the District of Columbia’s brief; and on July 14, 2025, the District of Columbia filed its reply. On September 24, 2025, the District of Columbia notified the court that the D.C. Council had amended D.C. Code § 16-1702 to clarify that it does not apply to sports betting authorized under the SWLAA, and that the amendment would become permanent after review by Congress. On September 29, 2025, plaintiff filed a response arguing that the amendment violated PASPA. On March 26, 2026, the district court dismissed the complaint with prejudice, concluding that it was barred by the amendment to D.C. Code § 16-1702. Plaintiff filed its notice of appeal to the United States Court of Appeals for the District of Columbia Circuit on April 9, 2026. Plaintiff’s opening brief on appeal was filed on July 27, 2026, and defendants’ filed their answering briefs on October 26, 2026.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
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The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
City of Baltimore
On April 3, 2025, the City of Baltimore (the “City”) filed a lawsuit against DraftKings and FanDuel seeking civil penalties and injunctive relief under Baltimore City Code Art. 2, Section 4. The City alleges that DraftKings violated Baltimore City Code Art. 2, section 4 by committing unfair, abusive and deceptive trade practices by allegedly (i) using data to allegedly target vulnerable Baltimore users; (ii) using misleading promotions such as “bonus bets” or “no-sweat bets;” (iii) concealing or misrepresenting the terms and conditions of those promotions; (iv) using data to identify Baltimore users with an alleged gaming disorder and then directing promotions at them; (v) directing messages with misleading urgency to those who allegedly may have gaming disorders; (vi) using the VIP program to allegedly exploit people with alleged gaming disorders; (vii) offering escalating rewards through its VIP program to target alleged users with gaming disorders; and (viii) failing to implement responsible gaming measures. The City seeks injunctive relief and statutory penalties for each violation of Baltimore City Code Art. 2, section 4.
On May 7, 2025, the defendants removed the lawsuit from state court to the United States District Court for the District of Maryland (Northern Division). On June 6, 2025, the City filed a motion to remand the case to state court. On November 10, 2025, the district court granted the plaintiff’s motion to remand. On November 12, 2025, defendants filed a notice of appeal of the remand order, and on November 13, 2025, the state court stayed and administratively closed the case, subject to reopening once the appeal has been adjudicated. On January 28, 2026, the defendants filed their opening appellate brief. The City filed its response on February 23, 2026, and the defendants filed their reply on March 19, 2026. The appeal remains pending.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Macek I
On April 18, 2025, plaintiffs Kenneth Macek, Matthew Harner, Avi Setton, Lionel Alicea, and Robert Walker, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc., Crown PA Gaming Inc. dba DraftKings, and Golden Nugget Online Gaming LLC (“Golden Nugget Online Gaming”) in the United States District Court, Eastern District of Pennsylvania. Among other things, plaintiffs allege that the Company’s “risk-free” and “no sweat” promotions, and the promotion that offered new customers an opportunity to earn up to 1,000 site credits as a sportsbook deposit match, as well as promotions that offered site credits in connection with a casino deposit match, were unfair, unconscionable, and misleading (collectively, the “Promotions Claims”). Plaintiffs also allege that DraftKings targets players with gaming addiction issues, including by assigning certain players with VIP hosts. Plaintiffs assert causes of action for violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, negligence, intentional misrepresentation, failure to warn, fraudulent inducement, unjust enrichment, intentional infliction of emotional distress and conversion. Plaintiffs seek, among other things, unspecified compensatory damages, punitive damages, attorney fees and costs. Plaintiffs seek to certify a nationwide class relating to the Promotions Claims, of: (i) anyone who participated in the casino deposit match promotion and lost part or all of their initial deposit (with a Pennsylvania subclass); (ii) anyone who allegedly opted into the “risk free” or “no sweat” promotion (with a Pennsylvania subclass); and (iii) anyone who allegedly deposited money in response to the 1,000 new customer sportsbook deposit match promotion (with a Pennsylvania subclass). Plaintiffs also seek to certify a class relating to alleged addiction claims, of (i) anyone who developed or displayed problem gaming behavior and was allegedly targeted by DraftKings’ VIP hosts or promotions or otherwise induced to game or continue to game (with a Pennsylvania subclass); and (ii) anyone who was allegedly permitted to continue gaming after self-excluding or who asked DraftKings to suspend or close their account (with a Pennsylvania subclass).
On June 24, 2025, defendants filed a motion to dismiss. In response, on July 15, 2025, plaintiffs filed a first amended complaint (the “First Amended Complaint”), removing plaintiff Walker and adding new plaintiffs Shane Spencer and Rangaraj
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Sadagopan. The First Amended Complaint removed all of the allegations, purported classes, and causes of action relating to the Promotions Claims.
The First Amended Complaint only alleges claims and causes of action relating to alleged addiction matters, as follows: negligence, breach of fiduciary duty, unjust enrichment, intentional infliction of emotional distress, and strict and negligent products liability. The First Amended Complaint also contains individual claims for breach of contract and conversion based on the closure of plaintiff Setton’s account. In the First Amended Complaint, plaintiffs seek, among other things, unspecified compensatory damages, punitive damages, attorney fees and costs. Plaintiffs seek to certify a nationwide class of (i) anyone who developed or displayed problem gaming behavior and was allegedly targeted by DraftKings’ VIP hosts or otherwise induced to game or continue to game (with a Pennsylvania subclass); (ii) anyone who was allegedly permitted to continue gaming after asking DraftKings to suspend or close their account (with a Pennsylvania subclass); and (iii) anyone who was exposed to the allegedly dangerous design of features of DraftKings’ app and could not control their compulsive gaming (with a Pennsylvania subclass).
On July 29, 2025, DraftKings filed a motion to dismiss. On March 23, 2026, the district court granted the motion as to all claims and dismissed all claims with prejudice (except for a conversion claim of one plaintiff, which it transferred to Pennsylvania state court), and ordered the case closed. On April 17, 2026, plaintiffs filed a notice of appeal, and on July 7, 2026, plaintiffs filed their opening appellate brief and a motion to certify a question of state law to the Pennsylvania Supreme Court. DraftKings filed its’ response brief and response to the motion to certify on August 27, 2026. The appeal remains pending.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Macek II
On July 15, 2025, plaintiffs Kenneth Macek, Matthew Harner, Avi Setton, Lionel Alicea, and Robert Walker, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc., Crown PA Gaming Inc. dba DraftKings, and Golden Nugget Online Gaming in the United States District Court, Eastern District of Pennsylvania. Among other things, plaintiffs allege that the Company’s “risk-free” and “no sweat” promotions (collectively, the “No Risk Promotions”), and the promotion that offered new customers an opportunity to earn up to 1,000 site credits as a sportsbook deposit match (the “Sportsbook Deposit Promotion”), as well as DraftKings’ and Golden Nugget Online Gaming’s respective promotions that offered site credits in connection with a casino deposit match (collectively, the “Casino Deposit Promotion”), were unfair, unconscionable, and misleading. Plaintiffs bring consumer protection, fraud, and unjust enrichment claims seeking, among other things, unspecified compensatory damages, punitive damages, attorney fees and costs. Plaintiffs seek to certify a nationwide class of (i) anyone who participated in DraftKings’ or Golden Nugget Online Gaming’s Casino Deposit Promotion and lost part or all of their initial deposit (with a Pennsylvania subclass); (ii) anyone who allegedly opted into DraftKings’ No Risk Promotions and lost their bet (with a Pennsylvania subclass); and (iii) anyone who allegedly deposited money in response to DraftKings’ $1,000 Sportsbook Deposit Promotion (with a Pennsylvania subclass).
On September 16, 2025, DraftKings filed its motion to dismiss. On September 30, 2025, plaintiffs filed their response, in which they withdrew two of their three fraud claims. On October 7, 2025, DraftKings filed its reply. Also on September 16, 2025, DraftKings filed a motion to consolidate Macek I and Macek II for all purposes.
On April 8, 2026, the district court granted in part and denied in part DraftKings’ motion to dismiss. The district court denied the motion to consolidate as moot given that it granted the motion to dismiss Macek I.
On May 13, 2026, plaintiffs filed a first amended complaint (“FAC”). On May 27, 2026, DraftKings filed a motion to dismiss the FAC, which the court denied on June 17, 2026. As a result, the case will proceed with the following claims: (1) violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law based on the Casino Deposit Promotion (Count I), No Risk Promotions (Count III), and Sportsbook Deposit Promotion (Count IV); (2) an intentional misrepresentation claim based on the Casino Deposit Promotion only (Count II); (3) and an unjust enrichment claim (Count V) based on the Casino Deposit Promotion, No-Risk Promotions, and Sportsbook Deposit Promotion. Counts I, II, and V are asserted against
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Golden Nugget Online Gaming in addition to DraftKings Inc. and Crown PA Gaming Inc. Defendants filed an answer on July 15, 2026. An initial pretrial conference was held on October 28, 2026.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Moore (now Zhen v. DraftKings Inc.)
On June 1, 2025, plaintiffs Brandon Moore, Zhicheng Zhen, and Jonathan Smith, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc. and Doe defendants in the United States District Court, Northern District of California. Among other things, plaintiffs allege that DraftKings has been operating illegal online gambling platforms in California through its “Daily Fantasy Sports” and “Pick6” contests in violation of California law. Plaintiffs claim that these contests amount to unlawful lotteries, games of chance, or sports betting and that DraftKings falsely represents these services as lawful in California, including through misleading public statements and platform disclosures.
Plaintiffs bring claims under California’s Unfair Competition Law (“UCL”) and Consumer Legal Remedies Act (“CLRA”), and seek, among other things, injunctive relief, restitution, disgorgement, and attorneys’ fees and costs. Plaintiffs seek to represent a purported class of all California residents who allegedly placed a bet or wager on DraftKings’ alleged Daily Fantasy Sports and Pick6 gambling websites while physically located in California. On July 11, 2025, plaintiffs filed a Notice Regarding Legal Opinion Issued By The California Attorney General enclosing an opinion from the California Attorney General (Opinion No. 23-1001) in which the California Attorney General opined that “California law prohibits the operation of daily fantasy sports games with players physically located within California.” On July 14, 2025, two other actions pending in the Northern District of California were referred sua sponte by the court to the Judge assigned to Moore for determination on whether such actions should be related under Civil Local Rule 3-12(e) (Beltran v. FanDuel, Inc., Case No. 25-cv-5586-JSC; Head v. Underdog Sports, LLC, Case No. 25-cv-5542-JST). On July 16, 2025, the court referred sua sponte a third pending action for the same determination (Franks v. Prize Picks, Case No. 25-cv-4916-JD). On July 24, 2025, the court assigned to Moore held that those three actions were related to Moore and assigned all three cases to that court. On August 1, 2025, plaintiff Moore voluntarily dismissed his case without prejudice; and upon motion by the plaintiff, the district court ordered that the case is now entitled Zhen v. DraftKings. On August 11, 2025, DraftKings filed its motion to dismiss, and on December 19, 2025, the court granted the motion to dismiss without prejudice.
On January 20, 2026, plaintiffs filed a first amended complaint that adds four new defendants: Crown Gaming Inc. and three individuals (Jason Robins, Matthew Kalish, and Paul Liberman) (the “First Amended Complaint”), in addition to DraftKings. Plaintiffs’ First Amended Complaint asserts nine causes of action arising from DraftKings’ alleged operation and marketing of its Daily Fantasy Sports and Pick6 offerings to users located in California. Plaintiffs bring claims under the UCL and the CLRA, and they added federal civil RICO claims under 18 U.S.C. §§ 1962(c) and 1962(d) (with civil remedies under § 1964(c)) asserted both against the three individual defendants and separately against all defendants (DraftKings Inc., Crown Gaming Inc., and those individuals). Plaintiffs also assert a gambling-loss recovery claim based on Cal. Civ. Code § 22.2 and the “Statute of Anne,” a claim under Cal. Penal Code § 496 (receipt of stolen property), and a claim for declaratory relief (28 U.S.C. § 2201). Plaintiffs seek injunctive and declaratory relief, restitution and other equitable relief, and, as pleaded, damages.
On March 30, 2026, DraftKings and the newly added defendants filed motions to dismiss the First Amended Complaint. On July 29, 2026, the district court dismissed with prejudice all claims seeking monetary relief, including the RICO, Statute of Anne, and California Penal Code § 496 claims, as well as the damages/restitution components of the UCL and CLRA claims, holding that California public policy bars recovery of gambling losses absent express statutory authorization. The only remaining substantive claims are the UCL and CLRA claims seeking prospective declaratory and injunctive relief against DraftKings. The district court also granted the motion to dismiss filed by Crown Gaming Inc. and the individual defendants, dismissing all claims against those defendants with prejudice.
On September 24, 2026, the court set a trial date for February 8, 2027.
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The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Micro-Gaming
On May 9, 2025, Micro-Gaming Ventures, LLC (“Micro-Gaming”) filed suit against DraftKings Inc. in the United States District Court for the District of New Jersey. In the complaint, Micro-Gaming alleges that the Company infringes five patents: (1) U.S. Patent No. 8,545,311, entitled “Systems and methods for enabling remote device users to wager on micro events of games in a data network accessible gaming environment”; (2) U.S. Patent No. 8,632,392, entitled “Systems and methods for enabling remote device users to wager on micro events of games in a data network accessible gaming environment”; (3) U.S. Patent No. 8,734,231, entitled “Systems and methods for enabling remote device users to wager on micro events of games in a data network accessible gaming environment”; (4) U.S. Patent No. 11,783,679, entitled “Location-based wagering via remote devices”; and (5) U.S. Patent No. 12,266,244, entitled “Location-based wagering via remote devices” (collectively, the “Micro-Gaming Patents”). The allegations for all of the Micro-Gaming Patents are directed to the “DraftKings Sportsbook.”
On August 8, 2025, the Company filed its motion to dismiss. On March 30, 2026, the Company’s motion to dismiss was granted with prejudice. On April 24, 2026, Micro-Gaming filed its notice of appeal. On September 15, 2026, Micro-Gaming filed its opening appellate brief. The appeal remains pending.
The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, the Company may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that the Company currently offers.
The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Product Liability Matters
Beginning on March 24, 2026, the first of fourteen lawsuits focused primarily on product liability claims was filed by individual plaintiffs in state courts in Massachusetts, Illinois, New Jersey and Pennsylvania against DraftKings Inc., and its related individuals and entities, and in certain instances, FanDuel, Inc., and other third parties. The complaints allege, among other things, that DraftKings’ online betting platforms are defectively designed and unreasonably dangerous because they allegedly incorporate features intended to encourage continuous betting and compulsive gaming. Plaintiffs also allege that the DraftKings defendants failed to adequately warn users about the risks associated with the use of the platforms and engaged in deceptive and unfair conduct through the use of, among other things, targeted promotions and wagering opportunities, notifications, data-driven personalization, and “VIP” programs. The complaints assert various claims under state tort and statutory laws and assert claims for personal monetary losses and actual, compensatory, statutory and/or punitive damages for alleged emotional, financial and physical harms. DraftKings has filed preliminary objections in five of the Pennsylvania cases. DraftKings removed four other Pennsylvania cases from state to federal court. DraftKings removed an Illinois case from state to federal court and filed a motion to dismiss, which remains pending. DraftKings also filed motions to dismiss in the two Massachusetts cases and in the one New Jersey case, all of which remain pending.
The Company intends to vigorously defend these cases. Any adverse outcome in any one of these matters could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of any one of these matters.
The Company cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible losses or ranges of losses. Any adverse outcome in one of these matters could expose the Company to substantial damages that may have a material adverse impact on the Company’s operations and cash flows.
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Interactive Games II
On April 2, 2026, Interactive Games LLC (“Interactive Games”) filed a complaint against DraftKings Inc. in the United States District Court for the District of Massachusetts alleging that DraftKings’ offerings infringe five patents. The following U.S. Patents are asserted against DraftKings’ mobile apps in the complaint: (1) U.S. Patent No. 12,409,382, entitled “Smart phone with wrapper application that checks whether the smart phone may use a gambling application”; (2) U.S. Patent No. 8,974,302, entitled “Multi-process communication regarding gaming information”; (3) U.S. Patent No. 12,548,404, entitled “Multi-level device verification for mobile gambling applications”; (4) U.S. Patent No. 12,400,518, entitled “System for facilitating online wagering with nearby mobile phones”; and (5) U.S. Patent No. 12,406,284, entitled “Mobile device proximity tracking for selective content delivery and formatting” (collectively, the “Interactive Games Patents”). On June 23, 2026, the Company filed a motion to dismiss. On October 27, 2026, the Court denied the Company’s motion as to the ’302 Patent and the ’382 Patent but kept the patentability of the ’404 Patent under advisement. On September 17, 2026, the Company filed a petition for inter partes review with the PTAB challenging the validity of the ’284 Patent, which challenge remains pending.
The Company intends to vigorously defend this case. In the event that a court ultimately determines that the Company is infringing the asserted patents, the Company may be subject to substantial damages, which may include treble damages and/or an injunction that could require the Company to modify certain features that the Company currently offers.
The Company cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Farley
On April 27, 2026, plaintiffs John Farley and Michael Fox, individually and on behalf of all others similarly situated, filed a purported class action complaint against DraftKings Inc. and certain FanDuel-related entities in the United States District Court for the Southern District of New York.
The plaintiffs allege, among other things, that DraftKings’ online sports wagering platform is improperly designed and operated and incorporates features intended to encourage compulsive gaming. The plaintiffs further allege that DraftKings engaged in deceptive and unfair conduct through the use of targeted promotions, bonus bet promotions, repeated notifications, and data-driven personalization.
The plaintiffs assert claims for violation of New York General Business Law §§ 349 and 350, negligence, and unjust enrichment. The plaintiffs seek, among other things, unspecified compensatory damages, restitution, disgorgement, injunctive relief, attorneys’ fees and costs. The plaintiffs seek to certify a nationwide class and a New York subclass of users who allegedly maintained sportsbook accounts on defendants’ sportsbook platforms, were exposed to their promotions, live or in-game betting features, or repeated wagering communications and who deposited money, placed wagers or suffered losses on the platforms. On October 1, 2026, DraftKings filed a motion to dismiss, and in response plaintiffs indicated they will amend their complaint rather than oppose.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
National Collegiate Athletic Association
On March 20, 2026, the National Collegiate Athletic Association (“NCAA”) filed a complaint against DraftKings in the U.S. District Court for the Southern District of Indiana. Plaintiff alleges, among other things, that DraftKings’ use of “March Mania,” “March Madness,” “Elite 8,” and “Final 4” on DraftKings Network and in DraftKings’ sportsbook platform constitutes trademark infringement, unfair competition, and dilution under the federal Lanham Act. On March 23, 2026, plaintiff filed a
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motion for a temporary restraining order seeking to prevent DraftKings from using certain alleged NCAA trademarks during the then-pending NCAA college basketball tournaments. On March 26, 2026, the district court denied plaintiff’s motion, holding that, although plaintiff had shown a sufficient likelihood of success on the merits on the preliminary record, the NCAA failed to show irreparable harm in view of the widespread use of the same phrases by DraftKings and numerous third parties over many years.
In an amended complaint filed on June 5, 2026, plaintiff added new allegations asserting similar claims with respect to the NCAA’s alleged “Sweet 16” trademark. Plaintiff seeks declaratory and injunctive relief, as well as disgorgement, damages, treble damages, and attorney’s fees and costs. On June 22, 2026, DraftKings filed its answer to the amended complaint.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Chan and Gordon
On July 28, 2026, plaintiff Michael Chan filed a putative class action complaint against DraftKings Inc. and GUS III LLC (“GUS III”) in the United States District Court for the District of Massachusetts. Plaintiff alleges, among other things, that DraftKings Predictions offers unlawful sports betting. Specifically, plaintiff alleges that event contracts on sporting events are unlawful in Alabama, California, Florida, Georgia, Minnesota, New Mexico, South Carolina, and Texas (the “Chan Relevant States”).
Plaintiff asserts claims against DraftKings and GUS III for unjust enrichment and violation of California’s Unfair Competition Law. Plaintiff seeks to represent classes of (1) all persons in the Chan Relevant States who spent money allegedly wagering on sports on DraftKings Predictions; and (2) all persons in California who spent money allegedly wagering on sports on DraftKings Predictions. Plaintiff seeks declaratory and injunctive relief, damages, restitution and disgorgement.
On August 3, 2026, plaintiffs Jason Gordon, Arie Weissman, and Johnny Harris filed a putative class action complaint against DraftKings Inc. and GUS III in the United States District Court for the District of Massachusetts. Plaintiffs allege, among other things, that DraftKings Predictions offers unlawful sports betting. Specifically, plaintiffs allege that event contracts on sporting events are unlawful in Alabama, Alaska, California, Florida, Georgia, Hawaii, Idaho, Nebraska, New Mexico, North Dakota, Oklahoma, Rhode Island, South Carolina, Texas, and Utah (the “Relevant States”). Plaintiffs assert claims against DraftKings and GUS III for unjust enrichment and for violations of Massachusetts’s gambling loss recovery statute, Mass. Gen. Laws ch. 137, § 1, Massachusetts’s consumer protection act, Mass. Gen. Laws ch. 93A, Texas’s gaming laws, Tex. Penal Code § 47.01, Texas’s Deceptive Trade Practices Act, California’s Gambling Control Act, and California’s Unfair Competition Law. Plaintiff seeks to represent classes of (1) all persons in the Relevant States who spent money by purchasing sports-related event contracts on DraftKings Predictions; and (2) all persons in each of the Relevant States who spent money by purchasing sports-related event contracts on DraftKings Predictions. Plaintiff seeks declaratory and injunctive relief, damages, punitive damages, statutory damages, multiple damages, attorneys’ fees, restitution, disgorgement, and an accounting.
Chan and Gordon have been consolidated for pre-trial purposes, and Gordon has been administratively closed. On October 14, 2026, the court denied plaintiff’s motion to appoint lead counsel.
The Company intends to vigorously defend these actions. If the court were to certify a class, and the class were to obtain a judgment in its favor, the Company may be subject to substantial damages, which may include restitution, disgorgement, and/or an injunction that could require the Company to modify certain aspects of its business. The Company cannot predict with any degree of certainty the outcome of the suits or determine the extent of any potential liability or damages.
The Company cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in either matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Hughes
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On July 29, 2026, plaintiff James M. Hughes filed a complaint against DraftKings Inc., GUS III LLC d/b/a DraftKings Predictions, and several other defendants, in the Court of Common Pleas for Charleston County, South Carolina. The case has been removed to the United States District Court for the District of South Carolina. On October 15, 2026, plaintiff filed a motion to remand the case to state court, which motion remains pending.
Plaintiff alleges, among other things, that defendants operate unlawful sports prediction markets in South Carolina through platforms that facilitate sports event contracts, which plaintiff contend constitute illegal sports gambling under South Carolina law. Plaintiff brings the action pursuant to South Carolina’s Statute of Anne (S.C. Code Ann. § 32-1-20), which plaintiff contends authorizes any person to seek recovery of alleged illegal gambling losses on behalf of South Carolina residents who did not commence suit within the statutory period. Plaintiff seeks an accounting of all qualifying losses, statutory recovery of those losses, treble damages, attorneys' fees and costs, declaratory relief, injunctive relief, and other relief authorized by statute. DraftKings has not yet responded to the complaint.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Andrio
On August 13, 2026, plaintiff Ricardo Andrio filed a putative class action complaint against DraftKings Inc. and GUS III in the United States District Court for the Central District of California. Per stipulation, that action was transferred to the United States District Court for the District of Massachusetts on October 13, 2026.
Andrio alleges that DraftKings Predictions is illegal, unlicensed sports betting. Andrio asserts claims against DraftKings and GUS III for violation of California Business & Professions Code §§ 17200 and 17500. Plaintiff seeks to represent a putative class of “all citizens of California who spent money purchasing sports event contracts on the DraftKings Predictions mobile or web platforms.” Plaintiff seeks declaratory and injunctive relief, compensatory and statutory damages, attorneys’ fees and costs, and pre- and post-judgment interest. On October 21, 2026, DraftKings and GUS III filed an unopposed motion to assign the case from Judge Sorokin to Judge Casper, which was granted on October 22, 2026. DraftKings and GUS III have not yet responded to the complaint.
The Company intends to vigorously defend this action. If the court were to certify a class, and the class were to obtain a judgment in its favor, the Company may be subject to substantial damages, which may include restitution, disgorgement, and/or an injunction that could require the Company to modify certain aspects of its business.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Vest
On September 30, 2026, plaintiff Daniel Vest filed a class action complaint in the United States District Court for the District of Massachusetts against DraftKings alleging that DraftKings’ purported use of artificial intelligence to target unsuccessful customers violates DraftKings’ agreements with its customers and consumer protection law. Plaintiff asserts claims for breach of contract, breach of implied contract, and money had and received. Plaintiff seeks compensatory and consequential damages, return of monies purportedly unjustly held by DraftKings, disgorgement, statutory damages, attorneys’ fees and costs, pre-judgment interest, and injunctive relief.
The Company intends to vigorously defend this action. If the court were to certify a class, and the class were to obtain a judgment in its favor, the Company may be subject to substantial damages, which may include restitution, disgorgement, and/or an injunction that could require the Company to modify certain aspects of its business.
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The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Seminole Tribe
On October 9, 2026, plaintiff The Seminole Tribe of Florida filed an action in the Circuit Court for Broward County, Florida alleging that Predictions and Pick6 constitute prohibited gambling in Florida, and that only plaintiff is permitted to offer this type of gambling in Florida pursuant to its 2021 tribal compact with the State of Florida. Plaintiff alleges that DraftKings, Mr. Robins, and GUS III have violated Florida Statute § 546.10(8)(a), Florida’s Deceptive and Unfair Trade Practices Act (Florida Statutes §§ 501.201 et seq.), and Florida’s common law prohibition on unfair competition. Plaintiff also alleges that Mr. Robins has violated Florida’s RICO statute (Florida Statutes §§ 895.01 et seq.). Plaintiff alleges that it has suffered harm in the form of lost profits, on the theory that customers in Florida who have used DraftKings’ offerings would have instead patronized plaintiff, and therefore DraftKings has allegedly diverted money from plaintiff. Plaintiff seeks declaratory and injunctive relief, restitution and disgorgement of all profits and revenues, nominal damages, attorney’s fees and costs, and pre- and post-judgment interest.
The Company intends to vigorously defend this case. Any adverse outcome in this matter could subject the Company to substantial damages and/or require alterations to the Company’s business. The Company cannot provide any assurance as to the outcome of this matter.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Payton
On October 22, 2026, plaintiffs Adrian Payton, Toi Smith, and Yolanda Perkins, individually and on behalf of all others similarly situated, filed a putative class action against DK Crown Holdings, Inc. d/b/a DraftKings, Inc., FanDuel, Inc., Flutter Entertainment plc, Belle of Orleans, LLC d/b/a Amelia Belle Casino, and Catfish Queen, LLC d/b/a Bally’s Baton Rouge in the Civil District Court for the Parish of Orleans, Louisiana (No. 2026-09867). Catfish Queen, LLC is alleged to be the Louisiana retail casino licensee under whose license DraftKings operates its sportsbook in Louisiana.
Plaintiffs allege that DraftKings’ and FanDuel’s mobile sportsbetting applications are defectively designed and unreasonably dangerous because they allegedly incorporate features intended to encourage continuous betting and compulsive gaming. The plaintiffs further allege that the defendants failed to adequately warn users about the addictive nature of the applications and that the defendants’ “risk-free,” “No Sweat,” and deposit match promotions were misleading.
Plaintiffs assert claims under the Louisiana Products Liability Act for design defect and inadequate warning. In the alternative, they assert claims for redhibition, breach of contract and bad faith breach, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, liability under the Louisiana Sports Wagering Act and its implementing regulations, and unjust enrichment. The plaintiffs seek, among other things, recission, restitution, disgorgement, attorneys’ fees and costs, interest, and unspecified compensatory and consequential damages.
The Company intends to vigorously defend this action. If the court were to certify a class, and the class were to obtain a judgment in its favor, the Company may be subject to substantial damages, which may include restitution, disgorgement, and/or an injunction that could require the Company to modify certain aspects of its business.
The Company cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. The Company also cannot provide an estimate of the possible loss or range of loss. Any adverse outcome in this matter could expose the Company to substantial damages or penalties that may have a material adverse impact on the Company’s operations and cash flows.
Other Litigation
In addition to the above actions, the Company is subject to various other legal proceedings and claims that arise in the ordinary course of business. In the Company’s opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect the Company’s financial condition, results of operations or liquidity, though the outcomes could be
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material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.
Internal Revenue Service
The Company is currently under Internal Revenue Service audit for prior tax years, with the primary unresolved issues relating to excise taxation of fantasy sports contests and informational reporting and withholding. Certain examinations have progressed further in the administrative process. The Company continues to dispute the assessments and is actively pursuing administrative remedies and intends to vigorously defend its positions. The Company is unable to predict the outcome of these proceedings at this time and cannot reasonably estimate the potential loss or range of loss, if any. The final resolution of these audits, and any related proceedings, may differ from the amounts recorded in these consolidated financial statements and may materially affect the Company’s results of operations in the period or periods in which that determination is made.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on February 13, 2026 (the “2025 Annual Report”).
Cautionary Statement Regarding Forward-Looking Statements
This Report contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements depend upon events, risks and uncertainties that may be outside of our control. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would,” “forecast,” “propose” and similar expressions or the negative of these words, or statements of vision, strategy or outlook, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Our historical results are not necessarily indicative of the results that may be expected for any events in the future as our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included elsewhere in this Report. Any statements contained herein that are not statements of historical fact may be forward-looking statements, such as:
•factors relating to our business, operations and financial performance, including:
•our ability to develop and market new offerings, including prediction markets;
•our ability to effectively compete in the global sports and gaming and prediction markets industries;
•our ability to successfully acquire and integrate new operations;
•our ability to obtain and maintain licenses with gaming authorities; and
•our inability to recognize deferred tax assets and tax loss carryforwards;
•market and global conditions and economic factors beyond our control, as well as the potential impact of general economic conditions and the potential impact of new and existing laws, regulations or policies, including those related to tariffs, import/export or trade restrictions, volatile inflation and interest rates, on our liquidity, operations and personnel;
•significant competition and competitive pressures from other companies worldwide in the industries in which we operate, including in the emerging prediction markets industry;
•our ability to raise financing in the future;
•the timing, amount or duration of the Company’s stock repurchase program;
•our success in retaining or recruiting officers, key employees or directors; and
•litigation and the ability to adequately protect our intellectual property rights.
In addition to these risks, other factors that could cause or contribute to such differences include those set forth under the caption “Risk Factors” in our 2025 Annual Report. Due to the uncertain nature of these factors, management cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any of these statements to reflect events or circumstances occurring after the date of this Report, except as required by applicable law. New factors may emerge, and it is not possible to predict all factors that may affect our business and prospects.
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Website and Social Media Disclosure
We disclose information about the Company, our business and other matters using our investor relations website (https://ir.aboutdraftkings.com) and may, from time to time, use our DraftKingsNews X account (@DraftKingsNews) to disclose such information. The information we post through these channels may be deemed material. Accordingly, investors and the public should monitor these channels, in addition to our SEC filings, press releases and public conference calls and webcasts. The contents of our investor relations website and our DraftKingsNews X account are not, however, a part of this Report. Information contained on DraftKings’ website or connected thereto is provided for textual reference only and does not constitute part of, and is not incorporated by reference into, this Report.
Our Business
We are a digital sports and gaming company. We provide users with online and retail sports betting (together, “Sportsbook”), online casino (“iGaming”), daily fantasy sports (“Fantasy”), digital lottery courier (“Lottery”), prediction markets and other 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, Fantasy, Lottery and prediction markets, as well as our other offerings. We are also highly focused on our responsibility as a steward of 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 offerings and technology in order to continuously launch new offering 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 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 offering 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 offerings, (b) launch our offerings in new jurisdictions, (c) create replicable and predictable jurisdiction-level unit economics in Sportsbook and iGaming and (d) expand our offerings. When we launch our 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 offerings.
Our current technology is highly scalable with relatively minimal incremental spend required to launch our 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 offering of choice for users and to maintain favorable relationships with regulators. We also expect to improve our profitability over time as our revenue and gross profit expand as jurisdictions 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 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 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:
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (amounts in thousands, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Revenue | $ | 1,329,063 | $ | 1,144,019 | $ | 4,418,374 | $ | 4,065,332 | |||||||||||||||
| Net Income (Loss) | (468,720) | (256,788) | (515,260) | (132,716) | |||||||||||||||||||
Adjusted EBITDA (1) | (316,899) | (126,488) | (34,449) | 276,785 | |||||||||||||||||||
| Basic and Diluted Earnings (Loss) Per Share | (0.94) | (0.52) | (1.04) | (0.27) | |||||||||||||||||||
Adjusted Earnings (Loss) Per Share (2) | (0.53) | (0.26) | (0.26) | 0.27 | |||||||||||||||||||
(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 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 $185.0 million in the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to higher revenue from our Sportsbook and prediction markets offerings (together, “Sports”), driven by higher Sportsbook handle and higher Sportsbook net revenue margin, partially offset by promotional investment associated with the launch of our prediction markets offering. Revenue increased by $353.0 million in the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to the strong performance of our Sports offerings, driven by higher Sportsbook handle and Sportsbook net revenue margin, partially offset by promotional investment associated with the launch of our prediction markets offering.
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, Fantasy, Lottery, prediction markets or other 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 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 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 offerings to appeal to a wider audience.
The charts below present our average MUPs for the three and nine months ended September 30, 2025 and 2026:
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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 offerings. The charts below present our ARPMUP for the three and nine months ended September 30, 2025 and 2026:
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MUPs increased 0.5 million, or 12.9%, and 0.2 million, or 5.4%, in the three and nine months ended September 30, 2026, compared to the three and nine months ended September 30, 2025, primarily due to unique payer retention and new customer acquisition on our Sportsbook and iGaming offerings, and on our prediction markets offering, which launched in December 2025.
ARPMUP increased by $3.1, or 2.9%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, and $3.8, or 3.2%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to a higher Sportsbook net revenue margin, partially offset by promotional investment associated with new customer acquisition on our prediction markets offering.
Sports Consumer Volume. We define Sports Consumer Volume as the total amount of settled customer wagers or trades on our Sportsbook and prediction markets offerings. Sports Consumer Volume excludes the volume from market makers on our prediction markets offering. Sports Consumer Volume provides useful information to investors and management as it is a key
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indicator of customer engagement that is not impacted by variability of sports outcomes and provides important insight into underlying growth trends. We do not utilize volume information to track performance of our iGaming offering because iGaming is generally not subject to the same variability in outcomes.
Sports Net Revenue Margin. We define Sports Net Revenue Margin as Sports revenue as a percentage of Sports Consumer Volume. Sports revenue includes revenue from our Sportsbook and prediction markets offerings. This provides useful information to investors and management as it is a key indicator in measuring the combined impact of our overall margin on our Sports offering and promotional reinvestment.
The tables below present our Sports Consumer Volume, Sports Net Revenue Margin, and revenue disaggregation for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, | |||||||||||||||||||||||
| (amounts in thousands) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Sports Consumer Volume | $ | 13,900,152 | $ | 11,402,405 | $ | 2,497,747 | 21.9 | % | |||||||||||||||
| Sports Revenue | 783,626 | 596,119 | 187,507 | 31.5 | % | ||||||||||||||||||
| Sports Net Revenue Margin | 5.6% | 5.2% | N/A | N/A | |||||||||||||||||||
| Sports Revenue | $ | 783,626 | $ | 596,119 | $ | 187,507 | 31.5 | % | |||||||||||||||
| iGaming Revenue | 460,923 | 451,300 | 9,623 | 2.1 | % | ||||||||||||||||||
| Other Revenue | 84,514 | 96,600 | (12,086) | (12.5) | % | ||||||||||||||||||
| Total Revenue | $ | 1,329,063 | $ | 1,144,019 | $ | 185,044 | 16.2 | % | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| (amounts in thousands) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Sports Consumer Volume | $ | 41,242,267 | $ | 36,757,637 | $ | 4,484,630 | 12.2 | % | |||||||||||||||
| Sports Revenue | 2,770,062 | 2,475,948 | 294,114 | 11.9 | % | ||||||||||||||||||
| Sports Net Revenue Margin | 6.7% | 6.7 | % | N/A | N/A | ||||||||||||||||||
| Sports Revenue | $ | 2,770,062 | $ | 2,475,948 | $ | 294,114 | 11.9 | % | |||||||||||||||
| iGaming Revenue | 1,384,153 | 1,304,431 | 79,722 | 6.1 | % | ||||||||||||||||||
| Other Revenue | 264,159 | 284,953 | (20,794) | (7.3) | % | ||||||||||||||||||
| Total Revenue | $ | 4,418,374 | $ | 4,065,332 | $ | 353,042 | 8.7 | % | |||||||||||||||
Sports Consumer Volume increased by $2.5 billion, or 21.9%, to $13.9 billion in the three months ended September 30, 2026, from $11.4 billion in the three months ended September 30, 2025, and increased by $4.5 billion, or 12.2%, to $41.2 billion in the nine months ended September 30, 2026, from $36.8 billion in the nine months ended September 30, 2025. These increases are primarily due to an increase in MUPs driven by unique payer retention and acquisition on our Sportsbook offering, as well as new customer acquisition on our prediction markets offering, which launched in December 2025.
Sports Net Revenue Margin increased by 0.4 percentage points, to 5.6% in the three months ended September 30, 2026, from 5.2% in the three months ended September 30, 2025, primarily due to a higher hold percentage on our Sportsbook offering, partially offset by promotional investment associated with new customer acquisition on our prediction markets offering. Sports Net Revenue Margin was flat at 6.7% in the nine months ended September 30, 2026, compared to 6.7% in the nine months ended September 30, 2025, primarily due to a higher hold percentage on our Sportsbook offering, partially offset by promotional investment associated with new customer acquisition on our prediction markets offering.
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iGaming revenue increased $9.6 million, or 2.1%, to $460.9 million in the three months ended September 30, 2026, from $451.3 million in the three months ended September 30, 2025, and increased by $79.7 million, or 6.1%, to $1,384.2 million in the nine months ended September 30, 2026, from $1,304.4 million in the nine months ended September 30, 2025. The increases are primarily due to higher handle, partially offset by increased promotional reinvestment.
Other revenue decreased $12.1 million, or 12.5%, to $84.5 million in the three months ended September 30, 2026, from $96.6 million in the three months ended September 30, 2025, and decreased $20.8 million, or 7.3%, to $264.2 million in the nine months ended September 30, 2026, from $285.0 million in the nine months ended September 30, 2025, primarily due to lower interest income on player funds, as the prior-year period included a reclassification of interest income on customer deposits to revenue, and lower advertising sales revenue, partially offset by growth in our Lottery offering and the launch of DK Racing.
Non-GAAP Information
This Report includes Adjusted EBITDA and Adjusted 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 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 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 Earnings (Loss) Per Share as basic and 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; other non-recurring and non-operating costs or income; and the tax impact of adjusting items, as described in the reconciliation below. The weighted-average shares outstanding used in the calculation of earnings (loss) per share are the GAAP weighted-average shares reported in the consolidated financial statements and are not adjusted.
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 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).
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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:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (amounts in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income (loss) | $ | (468,720) | $ | (256,788) | $ | (515,260) | $ | (132,716) | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
Depreciation and amortization (1) | 77,380 | 66,071 | 229,383 | 201,486 | |||||||||||||||||||
| Interest (income) expense, net | 11,383 | 19,573 | 24,556 | 14,513 | |||||||||||||||||||
| Income tax (benefit) provision | 7,274 | (12,065) | 11,846 | (5,875) | |||||||||||||||||||
Stock-based compensation (2) | 86,025 | 72,473 | 233,794 | 236,020 | |||||||||||||||||||
Transaction-related costs (3) | — | 6,860 | — | 6,860 | |||||||||||||||||||
Litigation, settlement, and related costs (4) | — | — | — | — | |||||||||||||||||||
Advocacy and other related legal expenses (5) | 12,825 | — | 59,063 | — | |||||||||||||||||||
| Loss (gain) on remeasurement of warrant liabilities | — | (4,233) | — | (877) | |||||||||||||||||||
Other non-recurring costs and non-operating costs (income) (6) | (43,066) | (18,379) | (77,831) | (42,626) | |||||||||||||||||||
| Adjusted EBITDA | $ | (316,899) | $ | (126,488) | $ | (34,449) | $ | 276,785 | |||||||||||||||
(1)The amounts include the amortization of acquired intangible assets of $37.6 million and $33.9 million for the three months ended September 30, 2026 and 2025, respectively, and $112.7 million and $113.0 million for the nine months ended September 30, 2026 and 2025, respectively.
(2)Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.
(3)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.
(4)Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our ordinary-course business operations.
(5)Reflects non-recurring and non-ordinary course costs relating to advocacy efforts primarily in pursuit of legalization of DraftKings offerings. For the three and nine months ended September 30, 2026, this spend primarily relates to legislative efforts for legalizing iGaming, supporting a ballot measure for legalizing Sportsbook, and other advocacy activities related to certain states. Advocacy and legal expenses incurred in the ordinary course of business have not been adjusted in this measure.
(6)Primarily includes the gain on repurchase of convertible notes, changes in the fair value of certain assets and liabilities, including contingent consideration, as well as our equity method share of investee’s gains and losses and other costs relating to non-recurring and non-operating items.
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Adjusted Earnings (Loss) Per Share
The table below presents the Company’s Adjusted Earnings (Loss) Per Share reconciled to its basic and 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:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Basic and diluted earnings (loss) per share attributable to common stockholders | $ | (0.94) | $ | (0.52) | $ | (1.04) | $ | (0.27) | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
Amortization of acquired intangible assets (1) | 0.08 | 0.07 | 0.23 | 0.23 | |||||||||||||||||||
Stock-based compensation (2) | 0.17 | 0.15 | 0.47 | 0.48 | |||||||||||||||||||
Transaction-related costs (3) | — | 0.01 | — | 0.01 | |||||||||||||||||||
Litigation, settlement, and related costs (4) | — | — | — | — | |||||||||||||||||||
Advocacy and other related legal expenses (5) | 0.03 | — | 0.12 | — | |||||||||||||||||||
| Loss (gain) on remeasurement of warrant liabilities | — | (0.01) | — | 0.00 | |||||||||||||||||||
| Other non-recurring and non-operating costs (income) | (0.09) | (0.03) | (0.16) | (0.08) | |||||||||||||||||||
Tax impact of adjusting items (6) | 0.22 | 0.07 | 0.12 | (0.09) | |||||||||||||||||||
| Adjusted Earnings (Loss) Per Share* | $ | (0.53) | $ | (0.26) | $ | (0.26) | $ | 0.27 | |||||||||||||||
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* Weighted average number of shares used to calculate Adjusted Earnings (Loss) Per Share for the three months ended September 30, 2026 and 2025 was 496.9 million and 496.6 million, respectively, and for the nine months ended September 30, 2026 and 2025 was 495.8 million and 495.5 million, respectively; totals may not add due to rounding.
(1)The amounts include the amortization of acquired intangible assets of $37.6 million and $33.9 million for the three months ended September 30, 2026 and 2025, respectively, and $112.7 million and $113.0 million for the nine months ended September 30, 2026 and 2025, respectively.
(2)Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.
(3)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.
(4)Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our ordinary-course business operations.
(5)Reflects non-recurring and non-ordinary course costs relating to advocacy efforts primarily in pursuit of legalization of DraftKings offerings. For the three and nine months ended September 30, 2026, this spend primarily relates to legislative efforts for legalizing iGaming, supporting a ballot measure for legalizing Sportsbook, and other advocacy activities related to certain states. Advocacy and legal expenses incurred in the ordinary course of business have not been adjusted in this measure.
(6)Beginning in the first quarter of 2025, the Company began applying an estimated non-GAAP effective tax rate, which was 23% in 2025 and is 27% as of the third quarter of 2026. 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.
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Results of Operations
Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
The following table sets forth a summary of our consolidated results of operations for the interim periods indicated, and the changes between periods:
| Three Months Ended September 30, | |||||||||||||||||||||||
| (amounts in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Revenue | $ | 1,329,063 | $ | 1,144,019 | $ | 185,044 | 16.2 | % | |||||||||||||||
| Cost of revenue | 900,011 | 784,079 | 115,932 | 14.8 | % | ||||||||||||||||||
| Sales and marketing | 605,664 | 360,370 | 245,294 | 68.1 | % | ||||||||||||||||||
| Product and technology | 137,392 | 114,680 | 22,712 | 19.8 | % | ||||||||||||||||||
| General and administrative | 179,125 | 156,780 | 22,345 | 14.3 | % | ||||||||||||||||||
| Income (loss) from operations | (493,129) | (271,890) | (221,239) | 81.4 | % | ||||||||||||||||||
| Interest income (expense), net | (11,383) | (19,573) | 8,190 | n.m. | |||||||||||||||||||
| Gain (loss) on remeasurement of warrant liabilities | — | 4,233 | (4,233) | n.m. | |||||||||||||||||||
| Other gain (loss), net | 25,790 | 16,720 | 9,070 | n.m. | |||||||||||||||||||
| Income (loss) before income tax and equity method investments | (478,722) | (270,510) | (208,212) | n.m. | |||||||||||||||||||
| Income tax provision (benefit) | 7,274 | (12,065) | 19,339 | n.m. | |||||||||||||||||||
| (Gain) loss from equity method investments | (17,276) | (1,657) | (15,619) | n.m. | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (468,720) | $ | (256,788) | $ | (211,932) | 82.5 | % | |||||||||||||||
Revenue. Revenue increased by $185.0 million, or 16.2%, to $1,329.1 million in the three months ended September 30, 2026, from $1,144.0 million in the three months ended September 30, 2025. The increase was primarily attributable to our Sports revenue, which increased $187.5 million, or 31.5%, due to higher Sports Consumer Volume and an increase in our Sports Net Revenue Margin of 0.4 percentage points, primarily due to a higher hold percentage and lower promotional reinvestment on our Sportsbook offering, partially offset by promotional investment associated with the launch of our prediction markets offering. Our iGaming offering also increased $9.6 million, or 2.1%, due to higher gross gaming revenue, partially offset by increased promotional reinvestment.
Cost of Revenue. Cost of revenue increased $115.9 million, or 14.8%, to $900.0 million in the three months ended September 30, 2026, from $784.1 million in the three months ended September 30, 2025. The increase was primarily driven by higher variable costs associated with revenue growth, including an increase of gaming taxes of $64.4 million.
Cost of revenue as a percentage of revenue decreased by 0.8 percentage points to 67.7% in the three months ended September 30, 2026, as compared to 68.5% in the three months ended September 30, 2025, primarily attributable to a higher hold percentage and lower promotional reinvestment on our Sportsbook offering.
Sales and Marketing. Sales and marketing expense increased $245.3 million, or 68.1%, to $605.7 million in the three months ended September 30, 2026, from $360.4 million in the three months ended September 30, 2025, primarily due to an increase in external marketing costs primarily related to our prediction markets offering and the launch of our Super App, as well as customer acquisition costs associated with the FIFA World Cup and launches in new jurisdictions.
Product and Technology. Product and technology expense increased $22.7 million, or 19.8%, to $137.4 million in the three months ended September 30, 2026, from $114.7 million in the three months ended September 30, 2025, primarily due to higher software and licensing costs and increased employee compensation, including stock-based compensation, in our product and engineering departments.
General and Administrative. General and administrative expense increased by $22.3 million, or 14.3%, to $179.1 million in the three months ended September 30, 2026, from $156.8 million in the three months ended September 30, 2025. The increase was primarily driven by a $12.8 million increase in advocacy expenses as well as an increase in stock-based compensation of $4.5 million.
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Interest Income (Expense), net. We recorded net interest expense of $11.4 million in the three months ended September 30, 2026, compared to $19.6 million of net interest expense in the three months ended September 30, 2025. The decrease primarily reflects a reclassification recorded in the prior-year period that moved interest income on customer deposits from interest income to revenue, partially offset in the three months ended September 30, 2026 by an increase in interest expense, primarily related to our Term B-2 Loan entered into in August 2026.
Gain (Loss) on Remeasurement of Warrant Liabilities. As all warrants were exercised or expired as of December 31, 2025, there was no remeasurement of warrant liabilities in the three months ended September 30, 2026, compared to a $4.2 million gain in the three months ended September 30, 2025.
Other Gain (Loss), net. We recorded a net gain of $25.8 million in the three months ended September 30, 2026, as compared to a net gain of $16.7 million in the three months ended September 30, 2025. The increase was primarily attributable to an $18.6 million gain on the repurchase of convertible notes, partially offset by lower gains on the remeasurement of contingent consideration.
Income Tax Provision (Benefit). We recorded an income tax provision of $7.3 million in the three months ended September 30, 2026, as compared to an income tax benefit of $12.1 million in the three months ended September 30, 2025. Although we have a cumulative three-year loss position, based on our recent financial performance and our future projections, we could record a reversal of all, or a portion of, the valuation allowance associated with U.S. deferred tax assets in future periods. However, any such change is subject to actual performance and other considerations that may present positive or negative evidence at the time of the assessment.
Net Income (Loss). Net loss increased by $211.9 million to a net loss of $468.7 million in the three months ended September 30, 2026, as compared to a net loss of $256.8 million in the three months ended September 30, 2025, for the reasons discussed above.
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
| Nine Months Ended September 30, | |||||||||||||||||||||||
| (amounts in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Revenue | $ | 4,418,374 | $ | 4,065,332 | $ | 353,042 | 8.7 | % | |||||||||||||||
| Cost of revenue | 2,741,178 | 2,482,441 | 258,737 | 10.4 | % | ||||||||||||||||||
| Sales and marketing | 1,329,934 | 937,237 | 392,697 | 41.9 | % | ||||||||||||||||||
| Product and technology | 388,217 | 326,357 | 61,860 | 19.0 | % | ||||||||||||||||||
| General and administrative | 514,501 | 486,874 | 27,627 | 5.7 | % | ||||||||||||||||||
| Income (loss) from operations | (555,456) | (167,577) | (387,879) | 231.5 | % | ||||||||||||||||||
| Interest income (expense), net | (24,556) | (14,513) | (10,043) | n.m. | |||||||||||||||||||
| Gain (loss) on remeasurement of warrant liabilities | — | 877 | (877) | n.m. | |||||||||||||||||||
| Other gain (loss), net | 52,354 | 41,201 | 11,153 | n.m. | |||||||||||||||||||
| Income (loss) before income tax and equity method investments | (527,658) | (140,012) | (387,646) | n.m. | |||||||||||||||||||
| Income tax provision (benefit) | 11,846 | (5,875) | 17,721 | n.m. | |||||||||||||||||||
| (Gain) loss from equity method investments | (24,244) | (1,421) | (22,823) | n.m. | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (515,260) | $ | (132,716) | $ | (382,544) | 288.2 | % | |||||||||||||||
Revenue. Revenue increased by $353.0 million, or 8.7%, to $4,418.4 million in the nine months ended September 30, 2026, from $4,065.3 million in the nine months ended September 30, 2025. The increase was primarily attributable to our Sports revenue, which increased $294.1 million, or 11.9%, due to higher Sports Consumer Volume, primarily driven by an increase in MUPs due to unique payer retention and acquisition on our Sportsbook offering as well as new customer acquisition on our prediction markets offering, which launched in December 2025. Our iGaming offering also increased $79.7 million, or 6.1%, due to higher handle, partially offset by increased promotional reinvestment.
Cost of Revenue. Cost of revenue increased $258.7 million, or 10.4%, to $2,741.2 million in the nine months ended September 30, 2026, from $2,482.4 million in the nine months ended September 30, 2025. The increase was primarily due to an increase in our variable expenses from higher revenue, such as gaming taxes, which increased $168.3 million.
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Cost of revenue as a percentage of revenue increased by 0.9 percentage points to 62.0% in the nine months ended September 30, 2026, as compared to 61.1% in the nine months ended September 30, 2025, primarily attributable to an increase in promotional reinvestment around new customer acquisition for our Sportsbook and prediction markets offerings.
Sales and Marketing. Sales and marketing expense increased $392.7 million, or 41.9%, to $1,329.9 million in the nine months ended September 30, 2026, from $937.2 million in the nine months ended September 30, 2025, primarily due to higher external marketing costs, including increased customer acquisition costs associated with the FIFA World Cup, the launches in Missouri and Arkansas, and the launch of our prediction markets offering.
Product and Technology. Product and technology expense increased $61.9 million, or 19.0%, to $388.2 million in the nine months ended September 30, 2026, from $326.4 million in the nine months ended September 30, 2025, due to increased compensation, including stock-based compensation, for employees in our product and engineering departments.
General and Administrative. General and administrative expense increased by $27.6 million, or 5.7%, to $514.5 million in the nine months ended September 30, 2026, from $486.9 million in the nine months ended September 30, 2025. The increase was primarily driven by a $59.1 million increase in advocacy and other related legal expenses, partially offset by a decrease in stock-based compensation expense of $27.5 million.
Interest Income (Expense), net. We recorded net interest expense of $24.6 million in the nine months ended September 30, 2026, compared to $14.5 million of net interest expense in the nine months ended September 30, 2025. The increase was primarily due to a $7.7 million increase in interest expense related to the Term B-2 Loan, Term B-1 Loan and revolving credit facility, and a $2.3 million decrease in interest income.
Gain (Loss) on Remeasurement of Warrant Liabilities. As all warrants were exercised or expired as of December 31, 2025, there was no remeasurement of warrant liabilities in the nine months ended September 30, 2026, compared to a $0.9 million gain in the nine months ended September 30, 2025.
Other Gain (Loss), net. We recorded a net gain of $52.4 million in the nine months ended September 30, 2026, as compared to a $41.2 million gain in the nine months ended September 30, 2025. The increase was primarily attributable to an $18.6 million gain on the repurchase of convertible notes, partially offset by lower gains on the remeasurement of contingent consideration.
Income Tax Provision (Benefit). We recorded an income tax provision of $11.8 million in the nine months ended September 30, 2026, as compared to an income tax benefit of $5.9 million in the nine months ended September 30, 2025. Although we have a cumulative three-year loss position, based on our recent financial performance and our future projections, we could record a reversal of all, or a portion of, the valuation allowance associated with U.S. deferred tax assets in future periods. However, any such change is subject to actual performance and other considerations that may present positive or negative evidence at the time of the assessment.
Net Income (Loss). Net loss increased by $382.5 million to a net loss of $515.3 million in the nine months ended September 30, 2026, as compared to a net loss of $132.7 million in the nine months ended September 30, 2025, for the reasons discussed above.
Liquidity and Capital Resources
We had $1,100.9 million in cash and cash equivalents as of September 30, 2026 (excluding restricted cash and cash reserved for users, which we segregate on behalf of our paid users for all jurisdictions and 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.
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 condensed consolidated balance sheets.
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On August 31, 2026, we repurchased $320.0 million in aggregate principal amount of the Convertible Notes for $300.4 million in cash. As of September 30, 2026, the Convertible Notes, net of issuance costs, balance was $942.1 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 “Original Revolving Credit Facility”). On August 25, 2026, we and certain of our subsidiaries entered into a second amendment to the Credit Agreement (the “Second Amendment”), which, among other things, provided for a new $750.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), on terms substantially similar to those of the Original Revolving Credit Facility, to replace the Original Revolving Credit Facility. The Revolving Credit Facility provides for revolving loans, swing line borrowings and letters of credit and has a maturity date of August 25, 2031. As of September 30, 2026, there was no principal outstanding under the Revolving Credit Facility, and $11.9 million in letters of credit were issued under the Revolving Credit Facility, with $738.1 million available for borrowing.
Term B-1 Loan. In March 2025, we and certain of our subsidiaries entered into a first amendment to the Credit Agreement, which provides for a new class of incremental term loans under the Credit Agreement in an aggregate principal amount of $600.0 million (the “Term B-1 Facility” and, such term loans, the “Term B-1 Loan”). The Term B-1 Facility requires principal payments in the amount of 1.00% per annum of the original aggregate principal amount of the Term B-1 Loan payable in quarterly installments. The Term B-1 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 September 30, 2026, there was $591.0 million in aggregate principal amount of Term B-1 Loan outstanding.
Term B-2 Loan. In August 2026, we and certain of our subsidiaries entered into the Second Amendment, which provides for a new class of incremental term loans under the Credit Agreement in an aggregate principal amount of $700.0 million (the “Term B-2 Facility” and, such term loans, the “Term B-2 Loan”). The Term B-2 Facility requires principal payments in the amount of 1.00% per annum of the original aggregate principal amount of the Term B-2 Loan payable in quarterly installments. The Term B-2 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 2.00% per annum, or (ii) in the case of ABR Term Loans, ABR plus an applicable margin of 1.00% per annum (with each of the capitalized terms used in clauses (i) and (ii) as defined in the Credit Agreement). As of September 30, 2026, $700.0 million in aggregate principal amount was outstanding under the Term B-2 Facility.
Other Purchase Obligations. We have certain non-cancelable contracts with vendors, licensors and others requiring us to make future cash payments. As of September 30, 2026, these purchase obligations were $2.3 billion, with $0.2 billion payable in the remainder of 2026.
Stock Repurchase Program. On July 30, 2024, our Board of Directors authorized the repurchase of an aggregate of up to $1.0 billion of our Class A common stock through open market purchases, privately negotiated transactions or other transactions in accordance with applicable securities laws. On November 6, 2025, our Board of Directors approved a $1.0 billion increase to our existing stock repurchase authorization, which brings the aggregate share repurchase authorization to $2.0 billion of our Class A common stock. We did not repurchase any shares during the three months ended September 30, 2026, compared to 1.6 million shares for $71.2 million during the three months ended September 30, 2025. We repurchased 5.5 million shares and 8.2 million shares for $154.2 million and $314.0 million during the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we have purchased 22.7 million shares of Class A common stock for $773.8 million since the inception of the stock repurchase program.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| Nine Months Ended September 30, | |||||||||||
| (amounts in thousands) | 2026 | 2025 | |||||||||
| Net cash provided by (used in) operating activities | $ | 63,026 | $ | 342,382 | |||||||
| Net cash provided by (used in) investing activities | (177,430) | (116,109) | |||||||||
| Net cash provided by (used in) financing activities | 179,152 | 151,721 | |||||||||
| Net increase (decrease) in cash and cash equivalents, restricted cash, and cash reserved for users | 64,748 | 377,994 | |||||||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at beginning of period | 1,604,595 | 1,330,193 | |||||||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at end of period | $ | 1,669,343 | $ | 1,708,187 | |||||||
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Operating Activities. Net cash provided by operating activities in the nine months ended September 30, 2026 was $63.0 million, compared to $342.4 million in the nine months ended September 30, 2025, primarily from an increase in net loss, net of non-cash items, of $387.7 million for reasons discussed in Results of Operations above, offset by a $108.3 million increase in cash provided by changes in operating assets and liabilities, primarily due to the timing of vendor payments and accrued expenses, and accounts receivable collections.
Investing Activities. Net cash used in investing activities during the nine months ended September 30, 2026 increased by $61.3 million to $177.4 million, compared to $116.1 million in the nine months ended September 30, 2025, primarily due to an increase of $20.0 million in cash paid for internally developed software costs and an increase of $44.0 million in cash paid for purchases of property and equipment.
Financing Activities. Net cash provided by financing activities during the nine months ended September 30, 2026 was $179.2 million compared to $151.7 million net cash provided by financing activities in the nine months ended September 30, 2025, primarily driven by $687.8 million of net proceeds from the Term B-2 Loan (compared to $588.1 million of Term B-1 Loan proceeds in the prior-year period), a $159.7 million decrease in treasury stock purchases under the Stock Repurchase Program and a $71.0 million decrease in treasury stock purchases for RSU withholding, partially offset by the $300.4 million utilized to repurchase $320.0 million principal amount of Convertible Notes.
Commitments and Contingencies
Refer to “Note 13 — Commitments and Contingencies” of our unaudited condensed consolidated financial statements included elsewhere in this Report for a summary of our commitments and contingencies as of September 30, 2026.
Critical Accounting Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. Our discussion and analysis of the financial condition and results of operations are based on these financial statements. The preparation of these financial statements requires the application of accounting policies in addition to certain estimates and judgments by our management. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual results could differ materially from these estimates.
During the nine months ended September 30, 2026, there were no changes to the critical accounting estimates discussed in the 2025 Annual Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no significant changes in our exposure to market risk during the nine months ended September 30, 2026. Refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk in the 2025 Annual Report.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2026. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
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Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The information required by this item is included in “Note 13 — Commitments and Contingencies” to the unaudited condensed consolidated financial statements, which is incorporated herein by reference.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this Report are any of the risks described in the 2025 Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Agreement with Commercial Counterparty
On August 26, 2026, we granted an aggregate of 187,188 time-based RSUs to an unaffiliated commercial counterparty (“Counterparty”) in partial consideration of a commercial agreement between Counterparty and the Company. Such time-based RSUs vest in quarterly installments, with 31,198 RSUs vesting per quarter between November 15, 2026 and February 15, 2028. Each RSU represents a right to receive one share of our Class A common stock upon vesting.
The foregoing transaction did not involve any underwriters, any underwriting discounts or commissions, or any public offering. The RSUs were issued in transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act. The recipient of the securities in the transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the securities and share ledger in connection with the transaction. There was no solicitation involved, and the recipient is an accredited investor.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information
Securities Trading Plans of Directors and Executive Officer
Certain of our directors and executive officers have made, and may from time to time enter into trading plans or make elections to have shares sold or withheld to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).
On September 14, 2026 , Jocelyn Moore , a member of our Board of Directors , entered into a trading arrangement designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act (the “Moore 10b5-1 Plan”). The Moore 10b5-1 Plan provides for the sale of up to 5,562 shares of the Company’s Class A common stock and terminates on the earlier of (i) the completion of all sales under the Moore 10b5-1 Plan and (ii) December 31, 2026.
On September 11, 2026 , the Paul Liberman 2015 Revocable Trust and the Paul Liberman 2020 Irrevocable Trust, for each of which our President, Operations and a member of our board of directors , Paul Liberman , retains investment power, entered into a trading arrangement designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act (the “Liberman 10b5-1 Plan”). The Liberman 10b5-1 Plan provides for the sale of up to 1,741,434 shares of the Company’s Class A common stock held by the Paul Liberman 2015 Revocable Trust and 502,487 shares of the Company’s Class A common stock
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held by the Paul Liberman 2020 Irrevocable Trust and terminates on the earlier of (i) the completion of all sales under the Liberman 10b5-1 Plan and (ii) June 30, 2028 .
R. Stanton Dodge Resignation
On November 2, 2026, R. Stanton Dodge notified the Company of his resignation as the Company’s Chief Legal Officer and Secretary, effective February 17, 2027, in order to pursue an opportunity in public service.
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Report:
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Exhibit Index
| Exhibit No. | Description | |||||||
10.1 | Second Amendment, dated as of August 25, 2026, among DraftKings Inc., DK Crown Holdings Inc., Golden Nugget Online Gaming Holdings, LLC, Jackpocket LLC, the lenders and issuing banks party thereto, and Morgan Stanley Senior Funding, Inc., as administrative agent and a swingline lender (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on August 25, 2026). | |||||||
31.1* | Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934. | |||||||
31.2* | Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934. | |||||||
32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104.1 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit). | |||||||
*Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| DRAFTKINGS INC. | ||||||||
| Date: November 6, 2026 | ||||||||
| By: | /s/ Alan W. Ellingson | |||||||
| Name: Alan W. Ellingson | ||||||||
| Title: Chief Financial Officer | ||||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||
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