DraftKings cuts jobs amid rising costs and AI shift

DraftKings is cutting jobs across the organization as the sports betting operator moves to reduce operating costs, with analysts estimating the restructuring could affect up to 5% of its 5,500-strong workforce.

Citizens Equity Research analyst Jordan Bender told clients that DraftKings confirmed the reorganization, though the company did not disclose how many roles are affected. Bender calculated that a 5% reduction would generate annual savings of approximately $30 million, based on a median employee salary of around $100,000 per company filings.

“That said, the timing of the staff reduction, a week and a half following earnings and guidance, suggests the cost savings were most likely contemplated in the 2026 EBITDA guidance of $700 million to $900 million EBITDA,” Bender said.

In a statement, DraftKings said it had “decided to reorganize some teams to better align their people with the most important priorities and areas of investment for the company,” adding that “unfortunately, these changes will impact some roles across the organization.”

Cost Pressures Mount

The layoffs come roughly ten days after the company reported fourth-quarter results. Q4 revenue rose 43% to nearly $2 billion, while adjusted earnings per share more than doubled to 36 cents. Despite that, DraftKings projected revenue growth would slow to approximately 14% in 2025, and shares have fallen 36% year-to-date.

The company’s cost base has been expanding steadily. General and administrative expenses grew 6%, 13%, and 22% in successive years from 2023 through 2025. Product and technology costs rose at an average rate of 20% over the same period.

DraftKings operates online sports betting in 26 states and pays state-level tax rates that include 20% in Massachusetts and 50% in Illinois. In 2023, the company cut 140 positions, or about 3.5% of its global workforce at the time.

AI Driving Workforce Changes

Artificial intelligence is central to how DraftKings is rethinking its cost structure. The company did not cite AI as a direct cause of the current cuts, but CEO Jason Robins said last year the company would “be able to basically replace what would have been human hires with AI agents and also reduce [workers] in certain areas as well.”

Bender described the company’s AI adoption as covering a range of internal functions, including writing RFPs, helping engineers write code, deploying chatbots, and drafting legal opinions, all of which reduce reliance on outsourced labor. On the external side, 70% of promotional spending is now determined by AI.

“Overall, we could expect more cost structure rationalization in the coming quarters and years as the business continues to benefit from AI and maturing markets,” Bender said.

Prediction Markets Add Competitive Complexity

The restructuring also comes as DraftKings navigates growing competition from prediction markets platforms such as Kalshi and Polymarket. Those platforms argue they operate under federal law rather than state gambling frameworks, allowing them to offer event-based contracts without paying state wagering taxes. Several states have filed lawsuits seeking to block that activity.

DraftKings has responded by launching its own prediction market offerings in jurisdictions where it does not hold state-regulated sports betting licences. The company reported its best quarter on record in Q4 2025, even as the prediction market competitive threat draws increasing attention from investors and analysts.

The Boston-based operator plans to relocate its headquarters from Back Bay to the city’s financial district next year, occupying approximately 125,000 square feet, broadly in line with its current footprint. Bender’s $700 million to $900 million EBITDA guidance range for 2026 now factors in the cost savings from the workforce reduction, though the exact timing and scale of the cuts remain unconfirmed by the company.

Source: Citizens Equity Research analyst Jordan Bender