DraftKings is set to lead Q2 2025 earnings, with analysts forecasting a significant beat driven by robust online sports betting (OSB) and accelerating iGaming revenue.
Analysts at Morgan Stanley estimate the company will report adjusted EBITDA of $260m, well above the $225m consensus and DraftKing’s own guidance of $200m.
According to Morgan Stanley’s latest industry preview, OSB handle grew 11.5% year-over-year in Q2 2025, while gross gaming revenue (GGR) rose 13%.
While those figures were slightly below Q1 levels, they reflect healthy momentum in a vertical that is steadily maturing.
Notably, net gaming revenue (NGR) growth across most regulated US states also remained steady in the 35–40% range, despite natural volatility in win rates.
That consistency has made digital gaming a focal point for investors.
Morgan Stanley stated that over the past 30 days, gaming stocks surged 17%, far outpacing the S&P 500’s 4% gain.
A substantial portion of that rally has been driven by enthusiasm around digital performance, with DraftKings leading the pack.
Even as DraftKings prepares for headwinds in the second half — including up to $40m in costs tied to its launch in Missouri and $35m in new tax obligations in New Jersey and Louisiana — a Q2 beat would reinforce confidence in its full-year targets.
The company is currently trading at approximately 15x its projected 2026 EV/EBITDA, despite a forecasted 120% compound annual EBITDA growth rate from 2024 to 2027.
Analysts say the stock is poised for a re-rating if the strong performance continues.
Not just DraftKings
The broader iGaming market is also outperforming expectations. The segment has posted over 20% year-on-year growth for twelve consecutive quarters, defying concerns around a slowdown in new state launches.
In Michigan, Morgan Stanley said, iGaming now represents about 70% of statewide GGR — a potential benchmark for market maturity in other states.
While digital channels continue to show strength, performance in traditional casino markets remains mixed.
The firm said high-frequency data shows a sequential improvement overall, with regional casinos and Macau accelerating in Q2, while Las Vegas softened.
The analysts attributed regional strength to normalised demand, some consumer trade-down, and targeted stimulus, while cautioning that Vegas may be giving back some of its post-Covid gains.
Still, companies with both digital upside and solid fundamentals in land-based markets are viewed favourably.
Wynn Resorts, for example, is expected to post a modest 2% Q2 beat, supported by recovery in Macau and “resilience” in Las Vegas.
While questions persist around Macau market share, analysts believe volatility in win rate may obscure more resilient handle trends — particularly among premium players.
The analysts added that investor interest is also growing around Wynn’s UAE development, which could add an estimated $15 per share in value if execution remains on track.
Despite recent share price gains, Wynn still trades at just 10.5x projected 2026 EV/EBITDA, well below its historical average of around 13x.
According to the analysts, the valuation leaves room for upside if the company delivers on both its international expansion and core property strength.
