Sports Betting: DraftKings, FanDuel Q4 Hold Rates in Focus Ahead of Q3 Earnings

As the NFL season progresses, sports betting operators are bracing for potential challenges in their earnings reports. DraftKings (NASDAQ: DKNG) and FanDuel owner Flutter Entertainment (NYSE: FLUT) are under scrutiny as analysts assess their Q4 hold rates and potential impacts on their market forecasts.

Key Insights

Operators struggling to capture maximum benefits of the NFL season: The operators are anxiously awaiting to see if they can take full advantage of the NFL’s popularity.
If Q4 holds disappointment, 2026 consensus estimates could be lowered: Analysts were quick to point out that a slow Q4 could lead to a recalibration of future earnings estimates.
Quarter-to-date hold in New York is 8.6%: This figure falls below the average during the previous three quarters.

With the NFL season starting off slowly for some key operators, analysts are increasingly focused on the hold rates for the fourth quarter. In a recent client note, Macquarie analyst Chad Beynon referred to the ability of online betting companies to take full advantage of the NFL season as, “the million-dollar question”.

sports betting — Image by caltatum from Pixabay

Last year, a number of customer-friendly NFL outcomes adversely affected the earnings of DraftKings and Flutter, and analysts fear this may happen again this year. Beynon noted that any disappointing hold in Q4 could lead to a re-evaluation of future hold expectations and a possible downgrade of estimates for 2026.

“If 4Q25 is another year of disappointing NFL hold, we anticipate a recalibration of future expectations,” Beynon commented.

Ambitious Hold Estimates

September typically accounts for around half of the total betting handles for operators in the third quarter, but the recent performance data indicates that DraftKings and Flutter’s earnings before interest, taxes, depreciation, and amortization (EBITDA) could be negatively impacted.

Beynon points out that both companies previously had structural hold estimates of 11% and 13% for Q4, but the trend over the last two years has shown a decline of about 200 basis points in their ability to meet these targets.

Expectations for DraftKings and Flutter’s Q4 EBITDA presently sit at $396 million and $570 million, representing significant year-over-year increases. However, these projections are built on hold rates of approximately 10% and 11.2%, potentially straining the capacity to meet historical averages where net hold rates averaged around 5.7% and 6.9%, respectively.

In the early stages of the current quarter, the hold in New York, the largest sports betting market in the United States, has averaged 8.6%, a decline from results in previous quarters.

Market Pain Could Mean Opportunity

Recent trends in prediction markets, such as Kalshi, indicate challenges for sports wagering stocks, with DraftKings and Flutter leading the declines. Analysts at the Global Gaming Expo (G2E) in Las Vegas, however, suggest that the selloff might be overblown, indicating potential opportunities for investors.

Beynon emphasizes that robust NFL hold rates and continued growth in iCasino could bode well for both companies as they navigate these turbulent waters.

“We think strong September online sports betting volumes and positive insights from third-quarter earnings calls could catalyse share prices,” he added, suggesting that both DraftKings and Flutter shares could rise significantly by year-end.

Conclusion

As DraftKings and FanDuel gear up for their Q3 earnings, challenges loom large over their potential to capitalise on the NFL season. With analysts keenly watching the hold rates and betting market dynamics, it will be pivotal for these operators to adjust their strategies if they hope to exceed market expectations. Investors will be keeping a close eye on how these factors unfold in the coming months.