DraftKings Lost 28% in One Morning and Elizabeth Warren Is Already Probing the Product It Bet Everything On
A brutal earnings miss sent DraftKings tumbling just as a powerful senator turned her gaze toward prediction markets. Sorting the real cause of the damage from the political noise reveals which risk investors should actually be watching.
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DraftKings (NASDAQ:DKNG | DKNG Price Prediction) shares fell as low as $16.55 on November 6, 2026, down 29.6% from the $23.52 prior close. Third-quarter results missed on both revenue and earnings, and the company cut its 2026 profit outlook to keep paying for Predictions. Predictions is its event-contract platform, a product that lets customers trade on real-world outcomes under oversight from the Commodity Futures Trading Commission (CFTC). By 2:04 p.m. ET, the stock had climbed back to $17.99, still down 23.53% on the day.
Washington is also paying closer attention. Reuters reports that Sen. Elizabeth Warren will likely control the Senate Banking Committee agenda in January, and she has already raised fraud concerns about prediction markets.
Signed Numbers Versus Promises
The 8-K filing contains the firm figures. Adjusted EPS came in at -$0.53 against a -$0.19 estimate. Revenue of $1.329B was 5.07% below expectations. Sales and marketing expense rose to $605.66M from $360.37M.
Guidance for 2026 adjusted EBITDA (a measure of operating profit before interest, taxes, depreciation, amortization and one-time items) dropped to $175M to $275M from $700M to $900M. DraftKings plans to spend $650M to $700M on Predictions this year, and management called the product’s 2026 revenue immaterial because promotions for new customers cancel out most of what it brings in. The 2027 target of $650M to $750M in Predictions revenue is a goal. Nothing ensures it. Management said it will “adjust our level of predictions investments accordingly” as regulation develops.
How Much Predictions Weighs on the Business
The Predictions spending absorbs most of the $875M to $925M in 2026 adjusted EBITDA that DraftKings plans from its core business. DraftKings has a market value of $8.94B and holds $1.101B in cash. Chief executive Jason Robins called the quarter “a pivotal moment” and pointed to more than 1.6 million Predictions customers. He also promised an “exceptional 2027”. Even if Predictions hits its 2027 target, it would still be a minority of the $7.35B to $7.75B in total revenue the company forecasts for that year. Most of DraftKings’ value rests on the core business, while most of the recent losses come from Predictions.
What Warren Said About Prediction Markets
On October 29, 2026, Warren posted that she and Sen. John Curtis have “serious concerns about election-related fraud on prediction markets, and whether the platforms are doing enough to prevent it.” On November 6, she posted “If you break the law, there will be consequences,” aimed at “Big Tech CEOs, Wall Street executives, and giant corporations.” Bespoke Investment Group flagged a 181-page dossier from former Warren and Sanders staff members that reportedly lists sports gambling among its target industries. 24/7 Wall St. has not independently reviewed that document.
Neither post names DraftKings. No letter, subpoena or investigation targeting the company has been made public. Calling this a probe of DraftKings goes beyond the public record. Bloomberg linked the fall to a 2027 forecast that misses estimates. The legal threat DraftKings itself noted comes from the courts. Robins described sports contracts ending in July 2028 as the “most draconian likely scenario.”
Did Warren Cause This Selloff?
No. Investors marked the stock down because of the spending and the guidance cut. As committee chair, Warren could hold hearings and send letters, but the CFTC sets the rules for this product, and the courts will decide whether sports contracts survive. Her scrutiny adds headline risk. The bigger concern is that DraftKings is losing money on Predictions while the courts decide the product’s legal status.
Here is what to check. If a Senate Banking letter or hearing notice names DraftKings after the new Congress begins in January 2027, the regulatory risk becomes real. Until then, the measure to follow is whether DraftKings keeps fourth-quarter Predictions spending within its $175M to $225M guidance and whether the stock holds above the $16.55 low it hit on November 6.
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Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
