Prepared remarks
Hello, everyone. Thank you for joining us, and welcome to the DraftKings Second Quarter 2026 Earnings Call. Operator provided instructions. I will now hand the conference over to Matt Rappaport, Vice President of Finance. Please go ahead.
Good morning, everyone, and thank you for joining us today. Certain statements we make during this call may constitute forward-looking statements that are subject to risks, uncertainties and other factors as discussed further in our SEC filings that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility to update forward-looking statements other than as required by law. During this call, management will also discuss certain non-GAAP financial measures that we believe may be useful in evaluating DraftKings' operating performance. These measures should not be considered in isolation or as a substitute for DraftKings' financial results prepared in accordance with GAAP. Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, slide presentation and business update, which can be found on our website and in our quarterly report on Form 10-Q filed with the SEC. Hosting the call today, we have Jason Robins, Chief Executive Officer and Co-Founder of DraftKings, who will share some opening remarks and an update on our business. Following Jason's remarks, our Chief Financial Officer, Alan Ellingson, will provide a review of our financials. We will then open the line to questions. I will now turn the call over to Jason Robins.
Thank you, Matt. Good morning, everyone, and thank you all for joining. We had a fantastic second quarter. Our core business continues to grow and is generating significant free cash flow, and our newly launched Predictions offering is growing faster than we anticipated. We are executing on the Super App strategy that we laid out at our Investor Day in March, and we are seeing massive new customer acquisition in states without regulated Sportsbook. We generated $115 million of adjusted EBITDA in the quarter, which would have been even better if not for the customer-friendly sport outcomes and our higher-than-expected customer acquisition. Strong retention and engagement of our newly acquired customers, along with Sportsbook friendly World Cup outcomes in July have been a positive tailwind so far in the third quarter. Our core business is in an even stronger place as a result and is on track to generate approximately $1 billion of adjusted EBITDA in 2026.
Our confidence in our ability to win in Predictions has only grown. After including our expected investment in Predictions, we are maintaining our fiscal year 2026 revenue guidance range of $6.5 billion to $6.9 billion and adjusted EBITDA guidance range of $700 million to $900 million. Let me start with company-wide metrics. Customer acquisition, retention and engagement all exceeded our expectations in the second quarter. Customer acquisition grew nearly 75% year-over-year as interest in the NBA Finals and the World Cup surged. Notably, in the second quarter, we achieved our best enterprise-wide customer acquisition cost since the first quarter 2025. We acquired roughly 30% more customers in this quarter than we had planned, and we leaned in, investing about 10% more in customer acquisition spend as we saw the data and captured that incremental demand. Even with that investment, underlying customer acquisition costs came in approximately 25% better than we anticipated.
We view this as a pull forward of acquisition and an optimized use of investment. In the second quarter, monthly unique payers growth accelerated to 9% year-over-year, and more than 6% when excluding World Cup only customers. Sports consumer volume, which includes Sportsbook handle plus Predictions consumer volume, increased 15% year-over-year in the second quarter. It is clear that our Super App rollout is already paying dividends. While we have all seen the amazing social content showing global World Cup fans traveling to North America for the tournament, it is important to note that 100% of our new customers are North America-based, and we expect them to generate gross profit for years to come. Spanish language availability within our app also proved popular and helped us reach new customer segments. We will upgrade our Super App again in August and expect to have the best offering across our main verticals, including Predictions this NFL season.
We are on offense. The core business is firing. Sportsbook handle increased 11% year-over-year in the second quarter while parlay handle mix continued to rise. For the third consecutive quarter, our handle share across Sportsbook states improved year-over-year. When normalizing for sport outcomes and customer acquisition, revenue increased 10% year-over-year in the second quarter. On a trailing 12-month basis, net revenue per unique customer grew 14% year-over-year in the first half of 2026, a view that smooths the timing of customer acquisition and reflects the durable growth in revenue we generate from each customer. Our data is also confirming that there is no discernible impact from prediction markets on our Sportsbook revenue. We continue to see only about 1% customer overlap between our Sportsbook and the largest prediction market operator in Sportsbook states, which tells us these platforms are drawing a fundamentally different and largely professional audience.
Based on internal analysis, we estimate that 80% to 90% of prediction market consumer volume in Sportsbook states comes from professional betting syndicates and institutional traders, which is volume that mostly would not have been on Sportsbook to begin with. This continues to strengthen our confidence that Predictions is a large and incremental opportunity. Lastly, our strong core performance was matched on the cost side. We operated with discipline in the quarter, and cost management will continue to be a major focus for the company going forward. We have confidence in the underlying earnings power and free cash flow generation of the business. Now diving deeper into Predictions. Let me start with the customer. DraftKings Sports is now live nationwide, housing all of our customer offerings under a single app umbrella, which is proving to be a significant accelerator to our business. Over 600,000 customers have engaged with our Predictions offering year-to-date.
The pace of adoption has far surpassed our expectations, and we are acquiring these customers at attractive customer acquisition costs, well below what we invest to acquire Sportsbook customers. Early data on volume per customer and month-over-month retention is similar to a Sportsbook customer, which is what we expected. More than half of our Predictions customers have engaged with combos, and combos are already approaching 20% of Predictions consumer volume. As a result of strong acquisition, retention and engagement, we are seeing rapid volume growth. From April to July, our annualized total volume traded grew nearly 5x from $2.3 billion to $11 billion. This is only the beginning, and we expect to build on this momentum as we improve our offering. That engagement starts with our offering, which we expect to be best-in-class this NFL season. We are building on more than a decade of experience across Sportsbook, Fantasy and iGaming, and we know what sports customers want.
Our Sportsbook and iGaming apps are top rated in the industry by third parties for a reason, and we will bring that same excellence to Predictions with intuitive customer experience, content packaging and promotional mechanics that already resonate with sports fans. We significantly improved our offering in the second quarter as we executed on the road map we laid out at Investor Day. We expanded our sports content offering from April to July by over 25x, and now offer over 30 markets per MLB, NBA and WNBA game, including player markets and quarter period and inning markets, and we broadened our coverage across multiple soccer leagues. This depth was bolstered by the launch of combos, which have quickly become one of the most popular ways for customers to engage with our offering. In June, we launched our in-house exchange, DKeX. And in July, we obtained approval as a Futures Commission Merchant from the National Futures Association.
Both steps position us to rapidly expand content depth, improve the end-to-end customer experience and capture more of the unit economics and lifetime value of our customers. We are also seeing meaningful traction on the market making side as we leverage our industry-leading Sportsbook modeling and risk management capabilities. We are live on 3 exchanges and consistently making markets on both singles and combos at a profit. While still early, we are seeing double-digit share in the markets where we participate. Now that DKeX is live and our market maker is integrated, the opportunity is even more compelling. As DKeX grows, it will create more opportunities for our market maker while deeper and more diverse liquidity will make our own offering more attractive to customers. This is a core differentiator that will provide a meaningful lifetime value advantage versus our competitors. As always, we are focused on the economics.
As we continue to improve our platform and monetization over the next several years, we believe that we can generate lifetime values on Predictions customers similar to those on our Sportsbook customers. Our vertical integration is what makes this possible. We own 3 key layers of the Predictions stack in-house: the brokerage, the exchange, and the market maker. This integration lets us capture economics across the entire value chain. We are the only operator that has all 3 up and running today, which gives us a structural lifetime value advantage over our competitors. While the revenue per customer will be lower than that of our Sportsbook offering, the higher-margin profile of the business supports a similar level of gross profit per customer over time. We have driven meaningful lifetime value improvement in Sportsbook for nearly a decade through our top-rated offerings, and we are confident we can run that same playbook in Predictions.
To wrap up Predictions, the similarity of Predictions customer metrics to Sportsbook customer metrics, our advantaged lifetime value position and our playbook to develop and innovate on a leading Predictions offering all underpin our confidence that we can win in the space. We are already seeing encouraging results, and our share rose as the second quarter progressed. We are excited to update you over the next quarter as this momentum continues. NFL kickoff is next. We continue to enhance the Super App ahead of football season, which will deliver a sports experience that no other operator can match, a top-rated Sportsbook offering and a fully vertically integrated Predictions offering. We entered the season from a position of strength with a strong core, access to nationwide customers and a playbook for how to win in sports that leverages our in-house marketing, product and technology infrastructure.
At our Investor Day, we laid out a path to a $55 billion to $80 billion industry gross revenue opportunity by 2030 and at least a 30% long-term adjusted EBITDA margin, and the progress we made in the second quarter made that path more tangible. We are moving with urgency and discipline. We are not building to participate. We are building to lead and win. With that, I will turn it over to our Chief Financial Officer, Alan Ellingson.
Thank you, Jason. I'll hit the highlights, including our second quarter performance and our fiscal year 2026 guidance. Please note that all income statement measures discussed, except for revenue, are on a non-GAAP adjusted EBITDA basis. As Jason mentioned, we generated $115 million of adjusted EBITDA in the second quarter. This would have been even higher absent customer-friendly sport outcomes and stronger-than-expected customer acquisitions, both of which weighed on near-term profitability. Normalizing for these factors, revenue increased 10% year-over-year in the second quarter. This top line strength was driven by continuing robust demand. As Jason noted, the nearly 75% increase in year-over-year customer acquisition was at our best customer acquisition costs since the first quarter of 2025 and was combined with sports consumer volume increasing 15% year-over-year and Sportsbook handle increasing 11% year-over-year, while parlay handle mix continuing to rise.
We had a tremendous NBA season with total handle growing 7% year-over-year and parlay handle mix increasing more than 400 basis points. The World Cup also provided an excellent opportunity to engage customers with Sportsbook handle approximately 6x higher than during the 2022 World Cup and approximately 4.5x on a same-state basis. Importantly, these customers are continuing to engage with us beyond the event reflected by continued double-digit year-over-year handle growth in July after the World Cup ended. We did experience some customer-friendly outcomes in June after 7 months of Sportsbook friendly outcomes mainly driven by the Knicks championship win, which had an outsized impact on our largest Sportsbook state, as well as by the World Cup group stage performance. We held nearly 12% for the World Cup in total with positive outcomes in July, mostly offsetting the aforementioned customer-friendly outcomes experienced in June.
Our overall World Cup performance is another demonstration of how outcomes can swing in the short term and typically normalize over an entire season or tournament. We also continue to operate with discipline on the cost side. Adjusted G&A expense declined 6% year-over-year and adjusted operating expenses, excluding external marketing and Predictions, also improved year-over-year. We remain focused on improving the efficiency of our cost structure while continuing to invest behind the opportunities that we believe will create the most long-term value. Strong retention and engagement of our newly acquired customers have further strengthened our confidence in the business. Our core business is on track to generate approximately $1 billion of adjusted EBITDA in 2026. Now I'll touch on our fiscal year 2026 guidance. Last quarter, we communicated fiscal year 2026 guidance of $6.5 billion to $6.9 billion in revenue and $700 million to $900 million in adjusted EBITDA.
That adjusted EBITDA guidance range already reflected our expected investment in Predictions, which we continue to view as a significant and incremental opportunity for the company. Given the strength of our core business and our ongoing expectations to invest in Predictions, today, we are maintaining our fiscal year 2026 guidance ranges. Our confidence is supported by what we're seeing across customer acquisition, retention, engagement and operating efficiency. While we remain prepared to invest where returns justify it, the underlying earnings power of our core business continues to exceed our expectations. As always, we remain disciplined in how we allocate capital. As our balance sheet strengthens and the business grows, we have increasing flexibility in how we fund our operations and investments. We will continue to evaluate opportunities to optimize our capital structure as our debt maturity profile evolves while maintaining a prudent approach to leverage. That concludes our remarks. We will now open the line for questions.
Questions and answers
Operator provided instructions. Your first question comes from the line of Stephen Grambling with Morgan Stanley.
I think one of the questions that we often get or pushback we get around prediction markets is you gave the stat that most of the volume coming through some of your competitors appears to be professionals or syndicate-type things. Why do you think you're able to capture a different customer and why will that be the same in prediction markets? And are there any limitations you see as you look at your vertically integrated platform in terms of the product set that you can offer them or even the promotions and personalization that perhaps you can get in OSB that might be different as we look at prediction markets and the ramp there?
Great question, Stephen. I think it's really the difference between states that have a legal and established OSB market and those that do not. In states that don't, like California and Texas, we are seeing a very similar customer profile to the customers we get on OSB in states where we do have OSB. If you look back at prior competitive launches, and there have been many, most of them, even if they get a little volume initially, don't make a long-term dent. There are a couple reasons why. First, customers are sticky. Second, we have an excellent product experience. In the case of Predictions, as you noted, it is highly differentiated in the content we offer, our ability to do promotions, and many other aspects that are very different from the experience you get on a sports prediction app. But even if you thought it was roughly equivalent, other competitors' launches show they still don't make a big impact.
We examined a lot of internal data and used third-party data, and triangulated various metrics to reach the same conclusion: one, there is very minimal, if any, cannibalization; and two, where these volumes are showing up in legal OSB states on the prediction markets, the demand and volumes have come from institutional professional syndicates and people who were not previously active on DraftKings. So it's encouraging to see this as an incremental opportunity rather than something we believe will be cannibalistic. We're taking it seriously and continuing to invest in the OSB product. To answer your first question, I think the situation will be different for us because we're focused on states where we don't have an OSB offering, and there, since there are no competitive OSB offerings, it's a very different picture.
Your next question comes from the line of Dan Politzer with JPMorgan.
I wanted to touch on the core business. One of your peers obviously has been talking about incremental sports investment in the promotional environment. They're investing a few hundred million dollars more. So how do you think about the competitive environment, the promotional environment as you go forward and the confidence in being able to achieve your guidance range for the year?
We've always seen fluctuations and promotions. I mean in the grand scheme of things, them spending a few hundred million more on promotions is not a major shift. And we've always been able to be more efficient with our promotions. So I expect that to continue to be the case. This has been for years now that we've seen fluctuations, honestly, much more significant increases in spend from certain other competitors than what we're seeing now. And this is kind of a blip on the radar from what we're seeing. There really isn't a big difference in the competitive environment on the OSB side. So just as we've always done, we are going to stay steady with our strategy. We're going to continue to execute, and we believe that we have really demonstrated over the last few years that we can be more efficient with our promo and we can grow our handle and GGR share at the same time. Those are not things that we view as a trade-off. So we're going to continue to execute that strategy.
Your next question comes from the line of David Katz with Jefferies.
I wanted to ask Jason: you reviewed the economics of players in prediction markets versus OSB players — can you help us understand the path to profitability for those players, given our experience with OSB? One issue we've been asked about and are exploring is best execution requirements in predictions. Can you route all of your volume to your own platform, or is that a more complicated dynamic than it appears?
I don't think it's more complicated. We're planning to shift the volume we have in sports to our platform in the coming months. We may continue to use third parties for certain tail sports, and for non-sports categories we'll continue to use third parties for now. Ultimately, though, we believe we can shift that volume to our exchange, so there's no real reason we can't do that. On the economics side, we're approaching this similarly to how we evolved in Sportsbook. We started off with an LTV model in the early days of Sportsbook and were pretty cautious because we didn't have a lot of data. Here we do have comparable data from Sportsbook, which gives us a good sense of customer acquisition expectations, although it's a bit less useful for modeling ultimate monetization of these customers. We've been very careful and disciplined; we're not assuming major increases we don't have line of sight to.
We are, however, assuming a reasonable roadmap for when we'll start to migrate. For example, we just got our FCM license, which changes our unit economics by bringing more to us. We're assuming timelines for migrating volume to our exchange and making assumptions about how we can grow market making there, but again we're being very cautious. I believe we can actually do better than what we're assuming. The good news is customer acquisition looks so strong right now that we don't need to assume anything more aggressive to make the numbers work. As I noted, we saw incredible efficiency in Q2: we spent about 10% more than planned but achieved 25% better customer acquisition costs, which gives a sense of how strong the environment is.
Your next question comes from the line of Jordan Bender with Citizens.
Jason, early days, you often gave what the cross-sell from like DFS into OSB looked like. Are you may be able to talk about that dynamic of cross-sell from Horse and Jackpocket and DFS into prediction markets in these new states versus how much of these people are just net new adds? And then maybe the second part of that is how is ESPN playing a role in all of this?
Yes, it's great that you brought that up because I think what you're touching on really is the underpinning of our strategy when it comes to acquiring and monetizing customers and growing our geographic footprint. It starts with wanting a full product suite. We want to offer as many customers as many products as we can in as many jurisdictions as possible around the country. On that mission, we have gone beyond, as you noted, DFS, into other verticals like lottery and horse. Right now, I think we have the strongest footprint of anyone in the legally regulated betting space when it comes to our product portfolio. That is a huge advantage for us and something we will continue to press. We also have a really strong cross-sell engine so that not only can we get those customers onto Predictions and similar products when we launch, but we can continue to create a flywheel where we are engaging customers across all of our products throughout the year, which is really great for monetization as well.
That is the core of the strategy. At this point, we have not put out any direct cross-sell numbers from DFS or anything else to Predictions. But as you can imagine, it is a very similar product to when we launched sports betting in these states, so we are seeing similar types of numbers, actually a little better because we have honed our ability to cross-sell since the early days of sportsbook launches.
Your next question comes from the line of Shaun Kelley with Bank of America.
Jason, I just wanted to go back to the prediction market spending target, the $200 million to $300 million. And I know you said that CACs are a little bit better there, but you're also chasing in Q2. I think we always think of DraftKings as kind of fishing when the fish are biting a little bit. So just help us think through if we kind of go through a really successful customer acquisition period in the third quarter and heading into the fourth. Do you think that you'd be willing to go above those targets if you are just really encouraged by what you're seeing in the data? Or are you able to kind of put some guardrails around it, just given the flexibility of dollars elsewhere?
Well, it's a great question you're asking, Shaun. We have always been and will continue to be very data-driven as a company. And what we do is we model out ROI on any capital investments, and we try to make the smartest capital investments we can to position the best returns for our shareholders over the long term. So this is really no different. I do think, in this case, though, remember, we already have a huge national marketing footprint partners like ESPN, NBC, Amazon, several sports leagues and others. So we already have a lot of capital going towards those things that is going to now basically just be more effective because it's reaching the same customers that we are reaching before in the Sportsbook states, but now it's also reaching all these remaining states that have Predictions. So that itself is a huge advantage for us. And then as we've noted, we're planning on investing an incremental $200 million to $300 million this year, which is not a small number.
But yes, you're right, we are going to follow the data, as we said in Q2, we did end up spending about 10% more than we expected. That was because the customer acquisition environment was so strong. Even with that 10% incremental spend, we have 25% better CAC than we expected. So if we see something like that line up this fall, then yes, I think it would be the wise move and our shareholders would want us to invest in that type of environment. But at this point, we feel like given the data we have, this is the right place to be. And obviously, we'll tweak it and make adjustments as we see data come in. But it's really something that, you're right, I think is how we've always operated, and we did that in Q2. I mean, just literally last quarter, we invested 10% more than we expected in customer acquisition.
Your next question comes from the line of Brandt Montour with Barclays.
Just looking at the guidance for the rest of the year, it implies a pretty big fourth quarter. I'm curious if you could give us some sense of how you think the building blocks can get you there between sports versus iGaming. More specifically with sports, what are your rough expectations for market-wide growth, do you expect market share growth, and what can we think of in terms of theoretical win margin for sports?
Yes. Q4 is always our biggest quarter, so I expect the same this year. What really encourages us is the strength we’re seeing in the core business. As we noted on the call and in our letter, we are expecting about $1 billion this year in adjusted EBITDA from the core business, which is a nice gain over last year. We’re also excited that momentum in the core is increasing. Everyone was questioning handle last quarter and in Q1, but nobody is asking about it now. Handle was the big question mark and people were worried about cannibalization from Predictions, yet handle grew 11% in Q2, and more importantly it has been on fire since Q2. Even after the World Cup, July handle was up 20% year-over-year, which shows real momentum. We’re seeing that continue into August, and I think it’s going to be a big NFL season. Often when there’s broad marketing, awareness, and chatter, it lifts everything, and the World Cup plus Predictions has kept people talking, which should lift results across the board.
I expect NFL to be large for us and for the back half of the year to be very strong. That said, we didn’t assume anything outsized when we put the guidance out; we used the assumptions we thought were appropriate earlier and we’re not changing those. Seeing the strength and momentum through and after the World Cup in July gives me great confidence that we are on track to hit, and maybe even exceed, our core business expectations for the back half of the year.
Your next question comes from the line of Clark Lampen with BTIG.
Jason, I wanted to come back to sort of DK Exchange and now that you have all of the sort of pieces here in place with brokerage, exchange and market maker. Could you help us understand, I guess, the philosophy as you sort of are seeing really favorable CAC right now in going to market. Should we assume that the majority of the onboarding volume from here forward is going to be running through the exchange? And if that's correct, and it starts to happen, what's the sort of derivative impact to the fee structure? Is there a level that maybe you believe you can achieve or have targeted for the fall?
Yes, it's a great question, and I'll come to the fee structure piece in a moment. But first, the first part of your question on just what the strategy is. The nice thing about Predictions is, and actually, this is true at Sportsbook too, it doesn't have to be all or nothing. You can plug into multiple exchanges, you can source content from multiple places. So what we will do is we will phase DK Exchange in. Our expectation is that the vast majority of our sports content, at least in the major sports that are going on this fall, starting, of course, with CFB and NFL that we're going to try to port as much of that volume over the exchange as fast as is reasonably possible. But the really important thing, the #1 thing that we are making sure is that we feel like we have the best possible consumer offering out there. So to the extent that, that means we have to move a little slower or a little faster on moving things onto our own exchange, we will.
Number one is making sure that the customer has the best experience because you can do things at a different pace in the back around that maybe help the economics. But what you can't do is repair a poor customer experience. So that's something we are holding as sacred. But I do expect that as we continue to move more and more volume through our own exchange, those unit economics will continue to improve for us, and that should be a tailwind not just through this year, but through next year as well. Remember, in Sportsbook, this was a multiyear tailwind. It took us several years to bring all of our content. And we don't even have all of it now, we have about 95% of our sports content that we price and trade in-house. So similarly here, when you think about exchange and market making, we're going to try to get to those kinds of numbers. But I don't know exactly how long it will take. I do think it will be faster than it was in Sportsbook because we have so much more core infrastructure now that allows us to move faster.
And as I said, it doesn't have to be all or nothing. In terms of the fee, that's a good question. I think right now, the fee structure for the industry has been pretty stable. I don't expect it to change much. So the more that we bring in-house, the more we can just capture LTV from those exchange fees ourselves, and that gives us a unit economics advantage and an LTV advantage over the competition.
Your next question comes from the line of Robin Farley with UBS.
I wonder if you could kind of help us think about the components of your EBITDA guide. It didn't change in total. And not that you're going to give the specific quantifications. But could you kind of talk us through, was there like an increase in what you thought you'd make in market making that's sort of offsetting some promotional or offsetting maybe hold impact? Or just kind of we think about what the puts and takes are of the unchanged guide?
Yes. There's always little pieces moving around that affect things, for sure. But the big components to think about are: number one, the core business is on track to do approximately $1 billion in adjusted EBITDA, and we're really excited about the momentum we're seeing there. I think there could even be a little upside on that. But right now we feel comfortable saying approximately $1 billion, and then $200 million to $300 million of Predictions investment expected for the year. So those are the high-level components of some of the things you are alluding to in the market, because there are little pieces moving underneath the hood. But some of those things are so small that they kind of wash through. And yes, we do obviously update them in our forecast, but they're not material enough for us to call out as individual line items.
Okay. And maybe just as a quick follow-up. In Q2, you talked about the revenue decline being a combination of sport outcomes and the higher commercial spend. Can you give us a sense of kind of what the split was just so when we're thinking about what you're comping, the sport outcomes kind of an easier thing to get back in theory. So just sort of kind of rough proportion of which of those versus, I think, what you said would have been up 10% in Q2 in revenue?
Yes. So sport outcomes basically drove about an $80 million revenue headwind and the rest was customer acquisition.
Your next question comes from the line of Trey Bowers with Wells Fargo.
Just wondering if you could dig a little more on the iGaming business. The revenue growth was pretty similar to the previous quarter and actually better than I'd say some of the state-level GGR was suggesting. So just curious about kind of the promotional environment, how you see that trending over time? And any thoughts on expectations for what that growth might look like for the balance of the year?
Yes. So iGaming, despite not performing as we had hoped over the last several quarters, is starting to show real momentum. It was a little better than some of the state reports might have suggested. A big part of that was the Lightning Link launch — one of the biggest land games ever and the last major land game of that magnitude to come online. We also launched a product called Flex Spins, which lets you give bonus spins across any game a customer chooses. Most competitors only allow bonus spins on specific games they assign, so customers have responded well and we've received a lot of positive feedback. Our share has stabilized after several quarters of decline, and I hope we can turn that into share gains over the next several months. I feel we have real momentum from these initiatives, and customer acquisition into iGaming has been really strong. While we've talked a lot about sports, we also saw better-than-expected iGaming customer acquisition in Q2. The business feels like it's on the rise, and I have big expectations for the coming months.
Your next question comes from the line of Jed Kelly with Oppenheimer.
Great. So circling around that 600,000 Predictions customers. Typically, when you launch in the state, I think you said previously, you're able to get mid- to high single digits of a population. Is there something structural or product-driven that precludes you from doing this as the product gets up to your standards where you really want to market it and get it into, call it, your meat and potatoes sports fans?
Yes, it's a great question. I think there are two things going on here. One is we are obviously still learning, and we are taking a somewhat more cautious approach to investment in Predictions for a few reasons. First, we're still learning about the numbers and what the ultimate LTVs can look like. Second, there are some regulatory questions that make the future and exactly what it will look like uncertain. So we aren't leaning in as hard as we would for, say, a new state launch at this point. As those things become clearer, we will reconsider and adjust, but right now that is how we are philosophically viewing it. The other factor is that many states DraftKings has not operated in for years have been exposed to national advertising, so there is an education period needed for people to understand they can actually use DraftKings in their state now. For example, if you are in California or Texas, you can use DraftKings now.
We started to do that messaging during the World Cup, and I think it will become even more apparent in the NFL season. As that broader awareness takes hold, you'll see much faster customer acquisition. This is similar to when we launched our first online sportsbook states: New Jersey ramped much slower than our more recent state launches. That's partly because we've honed our state launch playbook, and partly because of general awareness and market momentum—people now know when a state is launching and are ready for it. Predictions is at a different stage of that development curve; it's still growing and still requires education so people understand they can access DraftKings in states where they couldn't before. The benefit now is that we have a big national marketing footprint, so we don't need a massive amount of incremental spend to create that awareness. We can refine our message, which we started to do in Q2, to emphasize that DraftKings is now available in many more places and make those same dollars work across the country, whereas before our reach covered only about half the population.
Your next question comes from the line of Bernie McTernan with Needham.
Just wanted to circle back on something that you said in the prepared remarks about the flywheel of being vertically integrated. Just hopefully you could dive into that a little bit more talking about the structural advantage and network effect that come from being a vertically integrated prediction market operator.
Well, it's really important, the question you're asking, and it's been core to our strategy, not just in Predictions, but virtually every product we've had. I'll actually start by explaining it via OSB, but it's really no different conceptually than Predictions. So in OSB, when we started off, we launched the product on a third-party platform called Kambi. We were not using our own back-end technology. We were not doing any of our own pricing and trading. And thus, we were seeing 2 things. One, a lot of the unit economics were going out the door to others. And two, we didn't have full control of the product and customer experience. So really, where you see this flywheel develop is across 2 dimensions, LTV being the centerpiece of it. So the first dimension is that we can now capture more unit economics because we are on our own technology platform. We are doing our own pricing and trading.
So all that value is accruing to DraftKings. That allows us to then invest more back into customer acquisition because we now have higher LTVs. The second thing you're seeing is that we are improving our retention, improving our monetization because we are actually developing products at a faster pace and putting out differentiated offerings that we couldn't do before because we didn't have the full product control. And so our pace of development and the ability that we've had to increase our retention and our monetization of customers has just been absolutely tremendous the last few years. Predictions, same story. In Predictions, there's really 3 components. There's the front end, the IB, and also FCM is a piece of that, too. There's the exchange and then there's the market making, and DraftKings is playing in all 3 of those. We have a right to win in all 3 of those. And so we expect to be able to execute a similar playbook where we can capture a very large percentage of the total unit economics in LTV, which should give us that advantage that we have in Sportsbook now.
Similarly, we expect to be able to use these capabilities to develop proprietary content and create new offerings that other competitors will either be slow to catch up or may not even be able to do depending on what capabilities they have in-house. So very, very similar, exactly the same playbook that we executed in the other verticals. And the reason that we have a high degree of confidence that, one, this works; and two, we can execute it because we've done it before.
Your next question comes from the line of Ben Chaiken with Mizuho.
Jason, you mentioned acquiring more Prediction customers than planned and seeing retention in volume similar to OSB, which I believe indicates lower CAC. But if I heard correctly, did you acquire 10% more or spend 10% more on Predictions than you had planned? I ask in the context of overall external marketing spend, which I believe is lower than expected and presumably improves OSB. Can you clarify or add some color to what seemed like much more efficient external marketing spend within OSB, assuming I have the implied moving parts correct?
Well, it's a great question you're touching on because when I say we spend a little more, it doesn't always mean incremental to enterprise. We're also constantly optimizing our acquisition spend and all of our spend across every product that we have. So there may be times where we think it makes sense to add incremental, but there might also be times where like we just think we should shift some spend from this vertical to this one because we're getting more efficient performance here. And we have such a large portfolio of spend at this point across so many different channels, verticals and other parts of the ecosystem that we really have a lot of flexibility to do that. So it's a great question. And yes, you're right. And if we do see really strong Predictions results, it is possible we invest more as an enterprise, but it's also possible that depending on what we're seeing in our other verticals, we shift some of that spend over.
And anything particular in the OSB efficiency, EM spend-wise?
We saw a really efficient OSB spend results on the CAC side as well. I think there were 2 things. One, obviously, was World Cup. And two, I think being able to really have this broader DraftKings everywhere message has helped everything lift. So in the core, for example, in Q2, we saw a 40% year-over-year increase in customer acquisition at the best CAC we've seen since, what was it, 2024, I think, 2025, Q1 2025. So 6 quarters since we've seen this kind of efficiency. And I think next quarter is going to be much more efficient just based on seasonality. So really experiencing a great tailwind here across everything, and I expect that to continue going into the fall.
Your next question comes from the line of Joe Stauff with Susquehanna.
Going into the new sports calendar and the app upgrade in particular coming out in August. What do you think are the most relevant product upgrades you think will be material?
Well, I don't want to get into too many specifics because my product team wouldn't be too happy about that. But we do have a big upgrade coming up in the next few weeks with a number of new features and content planned to launch. More recently, maybe I'll talk about some recent features that we're going to continue to ramp across a few products. So first on Predictions, combos has been absolute smash, not surprising, but we're seeing incredible traction there. We just launched DK Exchange, we just obtained our FCM license. So tremendous progress on the vertical integration strategy. Combos, as an example, is about 20% of all of our volume now, which to put in perspective, took us years to get to in Sportsbook, so a much faster ramp on that front there. And then in our other products, we've had really great progress, too. So we launched something called Moonshot, which is an OSB product that we're really excited about.
On iGaming, I mentioned Flex Spin. There is the Lightning Link launch. So a lot of good stuff going into the fall, and we have more things planned. This is always August, when everyone's taking vacations in the Hamptons or wherever else. We're always working hard because it's the weeks leading up to our busiest time of the year, and we ship the most product in August than we do all year long, really. So this is a big moment for us in terms of upgrading the consumer offering.
We have now reached the end of the Q&A session. I will turn the call back to Jason Robins for closing remarks.
Thank you all for joining us on today's call. We are excited to be well positioned for continued success in the future, and thank you for your continued support. Have a good day.
This concludes today's call. Thank you for attending. You may now disconnect.