DraftKings Likely to Follow FanDuel in Downgrading Earnings, Says Analyst

It's a trend that looks like it will be commonplace for our best sports betting sites now that the NFL's regular season has wrapped up.

Shaun Kelley, a financial analyst from Bank of America, believes that DFS and gambling operator DraftKings will follow in the footsteps of competitor FanDuel in reducing predictions for Q4/2024 in light of extremely favorable results to NFL bettors. 

Kelley expects DraftKings to suffer in 4Q 2024 and estimates its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) will be downgraded by between $60 and $80 million. 

NFL favorites winning

While the earnings drop is significant, Kelley still thinks the results aren’t as bad as some investors believe and should be smaller than FanDuel's estimated decrease.

The NFL betting landscape is showing a clear trend of favorite teams winning more often than underdogs, which translates to lower profit margins for sportsbooks, especially in October. Markets like Iowa sports betting saw sports betting revenues drop year-on-year in October despite significant betting handles. 

As betting on teams that are likely to win presents less risk, more sports bettors tend to take the safe route, although these bets would pay out less in case of a win. As favorite teams keep winning so far this NFL season, betting operators end up with unbalanced books and tighter margins. This season, NFL favorites have been victorious in over 70% of games. These teams also covered the spread nearly 54% of the time, marking one of the highest rates in the Super Bowl era.

This phenomenon has already prompted adjustments from DraftKings’ competitor FanDuel, a subsidiary of Flutter Entertainment, which recently revised its financial guidance downward for 2024. This adjustment came after the company had raised its guidance twice last year.

DraftKings to face challenges head-on

DraftKings appears able to deal with the pressure with less proportional exposure than FanDuel. According to Kelley, this could potentially be due to differences in market share, betting volume, or customer demographics. 

"Several mitigating factors for DKNG include 1) DKNG's sponsorship of the Tyson-Paul fight with strong volumes/hold in Nov., 2) a +4891 pre-made parlay hitting on FanDuel in Dec. with over 17k bets placed, and 3) unfavorable outcomes during FanDuel's sponsorship of NFL Christmas Day games on Netflix," Kelly wrote in his analysis.

Kelley's report highlights the wider issues the sports betting industry faces, including the need for balanced betting markets and the unpredictable nature of game results in a volatile operating environment. 

Many operators have seen strong growth in their earnings in recent years. Yet, events like NFL favorites winning so often are a reminder of how changeable and hard-to-predict sports betting outcomes can be.

DraftKings's market share has been growing as the company continues to offer more services. Even so, investors might closely watch it for the rest of 2025. But Kelley thinks the company can handle the money impact of recent trends.

FanDuel and DraftKings have kept their top spots in the U.S. sports betting market. Together, they make up more than two-thirds of all the money earned in the industry. Those numbers are aided by the two behemoths offering excellent promotions that you don't need a DraftKings promo code or FanDuel promo code to access.

FanDuel still leads with a 40% share last year. Last year, it generated almost $5.8 billion in gross revenue from over $50 billion in wagers. 

DraftKings followed closely as the second-largest operator. It reported just under $4.7 billion in revenue from a handle of almost $49.5 billion.