The online gambling sector's earnings for the first quarter of 2026 indicate a notable shift towards prediction markets, alongside improved digital profit margins.
Companies that prioritize digital operations, such as DraftKings and Flutter, are increasingly leveraging prediction markets to engage users in regions where sports betting remains illegal. During their earnings calls for Q1 2026, these firms highlighted their involvement in market-making activities.
A clear divide has emerged between these online-centric companies and traditional casino operators like Caesars, MGM, and Penn Entertainment, who have yet to enter the prediction markets arena.
Here’s a summary of insights shared by gambling firms regarding prediction markets in their Q1 earnings reports.
DraftKings (DKNG): 1,300 bps Digital Margin Growth Fueled by Prediction Markets
DraftKings is at the forefront of implementing a prediction market strategy. During its Q1 earnings call, company leaders noted that their market-making efforts have already yielded positive returns, making it one of the quickest segments to achieve profitability in the company's history. They aim to secure a top-three position in the market-making landscape.
DraftKings reported a GAAP net income of $21.1 million for Q1, marking its first profit for this quarter, while adjusted EBITDA reached a record $167.9 million. The company also saw its digital margins expand by 1,300 basis points to 10.2%.
CEO Jason Robins commented on the significant impact of prediction markets, stating, "In April, our annualized predictions consumer volume surpassed $1 billion, and our market-making is already yielding positive returns, making it one of the fastest business lines to profitability we've ever launched."
DraftKings financial highlights include revenue of $1.646 billion (up 16.8% year-over-year), GAAP net income of $21.1 million compared to a net loss of $33.9 million, and a GAAP diluted EPS of $0.03, improving from a loss of $(0.07). Non-GAAP adjusted EBITDA was $167.9 million versus $102.6 million, with adjusted diluted EPS at $0.20 compared to $0.12.
Flutter (FLUT): Dual Strategy Following Leadership Changes
Flutter, the parent company of FanDuel, is also adopting a dual approach to prediction markets. It aims to attract customers through FanDuel Predicts in states without sportsbooks while simultaneously engaging in market-making on external platforms.
This strategy poses a risk of internal competition; however, Flutter claims that proprietary pricing will mitigate this issue. The company launched its market-making services on the CME Group in April and plans to expand these activities to additional third-party platforms soon.
The FanDuel Predicts app, developed in collaboration with CME, focuses on financial contracts, economic data, and event-driven sports markets.
Despite making strides, the recent dismissal of FanDuel CEO Amy Howe highlights the challenges faced by the US-facing sportsbook in the prediction markets landscape, especially in comparison to DraftKings.
Flutter's financial metrics show revenue of $4.304 billion (up 17% year-over-year), GAAP net income of $209 million (down 38%), and adjusted EPS of $1.22 (down 23%). The company reported US revenue of $1.763 billion, reflecting a 6% increase.
BetMGM: Defensive Strategies Against Prediction Markets
BetMGM reported an EBITDA profit of $25 million, an increase from $22 million year-over-year, with revenue rising 6% to $696 million. The digital segment's margin has also improved.