DraftKings Could Turn a Sports-Betting Threat Into a Growth Driver — Barrons.com

What happened

DraftKings is due to report third-quarter earnings after Thursday’s market close, with analysts expecting a loss of 41 cents per share and $1.4 billion in revenue. Investors are looking for an update on its prediction-market business, which DraftKings runs in-house by writing event contracts and operating the exchange.

Confirmed

Global impact / market context

Prediction markets let people trade contracts based on event outcomes in some states where traditional sports betting is not legal. If this business attracts customers, it could add revenue for DraftKings; keeping contracts and the exchange in-house may give it more control over operations and costs.

Analyst inference

DraftKings shares had fallen 44% through October 1 but rose 21% since October, as some analysts argued prediction markets could benefit the company. The outlook is uncertain because the Supreme Court has been asked to review who regulates sports event contracts.

Confirmed

What to watch

1. Thursday’s earnings report and management’s comments on prediction markets could clarify how the business is performing, though the supplied article gives no operating results for it. Analyst inference
2. Watch whether the Supreme Court takes up the dispute over regulatory oversight; a ruling could affect where event contracts can be offered and how they are regulated. Confirmed
3. Compare DraftKings’ in-house approach with Flutter’s use of Crypto.com contracts to assess whether owning the contracts and exchange affects costs, control, or growth. Analyst inference

Evidence

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