A number of people have been let go by betting behemoth DraftKings as the company makes cuts to keep pace with the advent of sports event contracts via lightly regulated prediction markets.
Recent figures suggest companies like Kalshi and Polymarket are funneling business away from traditional sportsbooks. A report found that online sports wagering revenue in New York plunged during the NFL playoff season, a period that normally booms for sportsbooks, at the same time that prediction markets were surging.
Statement emailed to employees on Monday 23 February
The layoffs could affect about 5% of DraftKings’ workforce and save the company roughly $30 million a year, according to a report Tuesday from Citizens Bank analyst Jordan Bender.
Employees discovered the job cuts after a company wide email was sent earlier in the week. It reportedly stated: “DraftKings has decided to reorganize some teams to better align their people with the most important priorities and areas of investment for the company. Unfortunately, these changes will impact some roles across the organization.”
Chief executive Jason Robins is attempting to convince investors that the company’s own brand of prediction markets developing in states that currently ban sports betting could see an uptick in financial performance.
In an earnings call earlier in the month, he said: “When a new growth lane opens, we move fast and execute at scale. Predictions is the most exciting new growth opportunity we have seen since … 2018.”
His view will catch the attention of some policy makers across the U.S, as states continue to battle prediction markets in the courts. Lawmakers and regulators are already debating whether platforms like Kalshi and Polymarket undermine existing gambling rules, tax structures and consumer protections.
Prediction markets are platforms where people buy and sell contracts tied to the outcome of future events. That includes sports events, which some critics have likened to sports betting but without the required license. They are federally registered exchanges overseen by the Commodity Futures Trading Commission (CFTC), which means they are federally regulated.
Job cuts come as DraftKings shares drop 50%
It’s been a difficult few months for the company, which has seen its share price tumble by more than 50% over the last six months.
DraftKings posted strong revenue growth in recent years as more states legalized sports betting and interest in wagering increased. Revenue rose 27% last year to about $6.05 billion. But growth is starting to slow. With fewer new states approving betting and signs that the market is becoming saturated, reports suggest the company expects a more modest increase ahead.
For 2026, DraftKings projects revenue between $6.5 billion and $6.9 billion. Financial analysts suggest, at the midpoint of that range, that would represent a slowdown in annual growth to about 11%.
Investors are hoping the reduction in workforce will reduce operating costs and improve net-income margins. Over the last few years, DraftKings has increased the size of its workforce by roughly 31%.
Massachusetts Superior Court allows case against DraftKings to continue
A Massachusetts Superior Court judge has allowed a class action lawsuit over a DraftKings promotion to move forward, rejecting the company’s bid for summary judgment. The case centers on a “$1,000 Deposit Bonus” offer that plaintiffs say was misleading.
The promotion promised $1,000 in bonus bets to new customers who deposited at least $5,000 and wagered $25,000 within 90 days. Some players said the terms were unclear, leaving them unable to collect the bonus even after meeting what they believed were the requirements.
DraftKings asked the court to dismiss the case and submitted visual examples of how the offer appeared. But the judge noted the materials were recreated and that multiple versions of the promotion existed, finding there were enough factual disputes for a jury to consider.
The court dismissed some claims, including alleged misuse of customer information, but allowed the main case to proceed. Attorneys for the plaintiffs said they will continue examining how the promotion was presented as the lawsuit enters the discovery phase.
Prediction market companies also in Massachusetts legal crosshairs
Another judge has issued a preliminary injunction barring prediction market operator KalshiEX from offering sports-related event contracts in the state without a gambling license. The order requires the company to stop offering contracts tied to game outcomes or player performance unless it complies with state sports betting laws.
Kalshi argued that federal law preempts state regulation. The company said requiring a state license would disrupt federal oversight and create regulatory conflict.
The court rejected that argument, finding the state is likely to succeed in its case. The judge ruled that federal commodities law does not override Massachusetts’ authority to regulate gambling and that Congress did not intend to displace state gaming laws when it amended the Commodity Exchange Act.
The court also found no conflict preventing Kalshi from complying with both federal and state rules and said requiring a license serves the public interest. The judge denied Kalshi’s motion to dismiss and ordered the company to obtain a state license if it wants to continue operating in Massachusetts.
The battle between legalized betting sites, prediction markets, and state courts appear to be intensifying and news of job cuts to DraftKings will put the entire sportsbook industry on alert.
