Posted on: April 1, 2026, 12:57h.
Last updated on: April 1, 2026, 12:57h.
- A pair of upsets may have provided some relief for DraftKings
- Analyst lifts Q1 EBITDA estimate to $154 million
- Says company’s full-year guidance is attainable
The NCAA Tournament was likely a neutral event as it relates to impact on DraftKings’ (NASDAQ: DKNG) first-quarter results, which the company is expected to deliver on May 7.
In a note to clients, Citizens Equity Research analyst Jordan Bender points out that March Madness again brought a limited number of upsets, though Florida’s early exit and Duke losing at the buzzer in the Elite Eight may provide some relief for DraftKings results. Regardless of sport, favorites consistently winning is a drag for sportsbook operators because the public typically backs “chalk.” Bender encourages investors to focus more on DraftKings’ earnings before interest, taxes, depreciation and amortization (EBITDA) over handle growth or lack thereof.
March Madness (in 1Q) appeared to be a neutral event from a game outcome perspective, indicating overall gaming margins could be a slight tailwind for the quarter,” says the analyst. “We revise our 1Q26 EBITDA estimate to ~$154 million after adjusting for Arkansas (~$20 million), and still see full-year EBITDA guidance as achievable exiting the first quarter.”
DraftKings and rival FanDuel recently launched online sports betting in Arkansas, but were live in the state for only a small portion of the first quarter.
DraftKings Could See Q2 Stability
Bender says DraftKings’ 2026 EBITDA guidance of $700 million to $900 million, which the operator issued in February, now looks achievable when accounting for the effects of March Madness and adjustments for Arkansas-related spending.
The analyst also points out that the second quarter is historically a period of stability for sportsbook operators and one that brings the highest parlay margins relative to other quarters. He adds DraftKings performed strongly in the comparable period last year, helped in part by house-friendly outcomes. This year, the World Cup, which starts in June, could be a catalyst.
Bender says the tournament could be comparable to the Super Bowl for DraftKings as he estimates the operator could notch gaming revenue of $47 million and a handle of approximately $600 million across June and July. In part, that outlook hinges on the success of the US team.
“A quick exit from the tournament would be positive for company EBITDA in 2Q26, while advancing into later rounds would be a tailwind for wagering growth but will hurt EBITDA in 2Q26,” according to the Citizens analyst.
Prediction Market Outlook
DraftKings is expected to spend $175 million this year on its prediction markets platform, DraftKings Predictions, though there is some fluidity with that estimate. Bender sees that offering ramping up into the World Cup with spending accelerating in the second half of this year as new NFL and NBA seasons start.
He says prediction markets spending is effectively priced into DraftKings’ share price at this point, but some investors may be overly concerned about the magnitude of those expenditures that matriculate into next year.
“Sales and marketing spend should be in a place to decline in the coming years outside of new state launches, particularly driven by the super app efficiencies,” concludes the analyst.
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