DraftKings Expands Beyond Traditional Sports Betting. Will Its Foray In The Forecast Market Make The Stock A Buy In 2026?
The Kings Are Not Prepared (NASDAQ: DKNG) make a good business decision by expanding into prediction markets. That, however, does not make this stock a 2026 buy. At least not if you have a long-term buy-and-hold mindset.
Here’s why buying this sports betting company just for the sake of moving into the prediction markets would be a mistake.
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DraftKings is one of the biggest players in sports betting. That is a new investment opportunity, although the word investment needs to be taken with a grain of salt. The investment opportunity belongs to DraftKings, not the customers using its service. The service offered by DraftKings is the ability to gamble on sports online.
Moving into prediction markets is just a logical extension of the company’s focus on gambling. Although prediction markets are not billed as gambling, they are win/lose bets on certain outcomes of an event. The only events covered go beyond sports to include things like the weather, the economy, and political outcomes. It would be foolish for DraftKings to miss the opportunity to grow their business by providing access to the prediction markets.
The good thing about this setup is that you can watch the forecast market to get a feel for what the future might hold. The downside is that people are basically gambling on the outcome of an event that has nothing to do with sports.
The problem with owning a gambling business was actually highlighted by DraftKings competitor FanDuel, its owner. Flutter (NYSE: FLUT). Flutter recently reported weak earnings for the fourth quarter of 2025, with the CEO telling CNBC that discouraged gamblers tend to stop betting.
This is the main problem with the entire business model of DraftKings. Right now, people see sports betting and prediction markets as a big profit. If there is a recession and money gets really tight, many current DraftKings users will have less money to gamble with. Often, they will be disappointed by broader economic conditions. If corporate users stop using the service, as FanDuel experienced, it won’t be good news for DraftKings.
Relying on what amounts to more betting is the right move for the DraftKings business. It may also lead to significant short-term business growth. The problem is that it just doubles down on the biggest long-term risk that should keep investors up at night: When consumers don’t engage in risk, gambling and predictive market activity can stop very quickly. Conservative investors should avoid DraftKings.
