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DKNG vs. PENN: Which Betting Stock Is the Better Buy Now?
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Key Takeaways
DKNG is leaning on scale, technology, and engagement to lift margins despite volatile sportsbook results.
PENN reset its digital strategy by exiting ESPN BET and refocusing on owned platforms to improve returns.
PENN's regional casinos and surging iCasino revenue provide steady cash flow alongside digital execution risk.
As the U.S. online betting industry enters a more mature phase, investors are shifting focus from land-grab growth to profitability, execution, and balance-sheet discipline. This sets up a timely faceoff between DraftKings Inc. (DKNG - Free Report) and PENN Entertainment, Inc. (PENN - Free Report) , two players taking sharply different paths to value creation.
DraftKings remains a pure-play digital operator, leaning on scale, technology, and customer engagement to drive long-term earnings power. PENN, by contrast, blends regional casinos with online betting exposure, aiming to leverage omnichannel loyalty and partnerships to stabilize results. With market sentiment split and valuations reflecting very different risk profiles, the key question for investors now is which betting stock offers the more compelling risk-reward at this stage of the cycle.
The Case for DKNG
DraftKings continues to show improving underlying momentum despite near-term noise. Management highlighted accelerating handle growth across core sports, stronger customer retention, and meaningful gains in parlay mix, all of which support structurally higher sportsbook margins over time. iGaming growth also re-accelerated, driven by higher engagement and better monetization per customer. These trends suggest DraftKings is benefiting from scale, product depth, and data-driven promotional efficiency, reinforcing its long-term earnings power even when quarterly results are volatile.
DraftKings’ expanding media partnerships and upcoming product initiatives add another layer of optionality. Management emphasized disciplined capital allocation, including a larger share repurchase authorization as free cash flow ramps. At the same time, the company plans to be measured in newer initiatives, targeting faster payback periods than legacy sportsbook investments. This balance, leaning into growth while tightening return thresholds, signals a maturing business model transitioning from land-grab mode toward shareholder returns.
A key risk remains the inherent volatility of sportsbook results. Customer-friendly sports outcomes had an outsized negative impact on recent revenue and EBITDA, underscoring how short-term results can swing sharply even when demand trends are strong. While management argues that these effects normalize over time, quarter-to-quarter earnings visibility remains limited, which can pressure the stock during unfavorable betting cycles.
DraftKings continues to invest heavily in new initiatives, technology, and market expansion, which may impact near-term profitability. Guidance revisions reflect not only adverse outcomes but also incremental spending tied to product launches and growth opportunities. Until these investments fully scale, margins may remain uneven, particularly compared with peers that already generate steadier cash flows. This makes DKNG better suited for investors with a longer time horizon and tolerance for volatility.
The Case for PENN
One of PENN’s biggest positives is its strategic reset in digital. Management made the deliberate decision to exit the ESPN BET partnership early and refocus on assets it fully controls, particularly theScore Bet in North America and Hollywood iCasino. This move simplifies the business, removes heavy fixed marketing costs, and gives PENN greater flexibility to target higher-return customer cohorts. Notably, the company retains ownership of the customer database built during the ESPN partnership, preserving long-term value while resetting unit economics ahead of 2026.
Another key strength is the accelerating momentum in iCasino, which management increasingly views as a profit engine rather than a loss leader. In the third quarter, PENN delivered record North American iCasino revenue, driven by strong cross-sell from online sports betting and rapid growth in monthly active users. Management emphasized improving retention, faster product innovation, and tighter CRM execution, all of which are lifting customer lifetime value. With online sports betting positioned primarily as a top-of-funnel tool, PENN appears better aligned to generate sustainable digital profitability over time.
PENN’s regional casino business remains a stabilizing force and a differentiator versus digital-only peers. Core demand trends were described as stable, with particularly strong performance in several Midwest markets and encouraging early results from the new Hollywood Casino Joliet. Management highlighted growing visitation, higher spend per visit, and database expansion, much of it incremental rather than cannibalistic. Combined with a visible development pipeline and disciplined capital allocation, the land-based segment continues to generate meaningful cash flow to support buybacks, deleveraging and growth investments.
On the downside, execution risk in the Interactive segment remains a near-term concern. While management reaffirmed its goal of reaching breakeven or better in digital operations in 2026, the transition away from ESPN BET introduces uncertainty around customer retention and short-term losses. The fourth quarter is expected to remain pressured due to rebranding costs and softer online sports betting volumes. Until theScore Bet proves it can scale profitably in the United States, investors must be comfortable with continued volatility in PENN’s digital earnings profile.
Stock Performance & Valuation
As witnessed from the chart below, in the past six months, DraftKings’ shares have lost more than PENN.
Price Performance
Image Source: Zacks Investment Research
Considering valuation, DraftKings is currently trading at a premium compared with PENN Entertainment on a forward 12-month price-to-sales (P/S) ratio basis.
P/S (F12M)
Image Source: Zacks Investment Research
Comparing EPS Estimate Trends of DKNG & PENN
The Zacks Consensus Estimate for DKNG’s 2026 earnings estimates implies a year-over-year improvement of 100.4%. The 2026 EPS estimates have decreased over the past 60 days.
DKNG’s EPS Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PENN’s 2026 earnings estimates implies a year-over-year improvement of 116.4%. The 2026 EPS estimates have decreased over the past 60 days.
PENN’s EPS Trend
Image Source: Zacks Investment Research
Wrapping Up
Overall, PENN Entertainment looks better positioned than DraftKings right now due to its more balanced and resilient business model. PENN’s digital reset reduces risk and sharpens its focus on profitability, while iCasino momentum and steady cash flow from regional casinos provide stability and funding flexibility. DraftKings, in contrast, remains more exposed to sportsbook volatility and ongoing investment needs, which can weigh on earnings visibility. As the industry matures, PENN’s diversified structure and clearer path to sustainable returns give it the edge at this stage.
Presently, DKNG carries a Zacks Rank #5 (Strong Sell), whereas PENN carries a Zacks Rank #3 (Hold).
Image: Bigstock
DKNG vs. PENN: Which Betting Stock Is the Better Buy Now?
Key Takeaways
As the U.S. online betting industry enters a more mature phase, investors are shifting focus from land-grab growth to profitability, execution, and balance-sheet discipline. This sets up a timely faceoff between DraftKings Inc. (DKNG - Free Report) and PENN Entertainment, Inc. (PENN - Free Report) , two players taking sharply different paths to value creation.
DraftKings remains a pure-play digital operator, leaning on scale, technology, and customer engagement to drive long-term earnings power. PENN, by contrast, blends regional casinos with online betting exposure, aiming to leverage omnichannel loyalty and partnerships to stabilize results. With market sentiment split and valuations reflecting very different risk profiles, the key question for investors now is which betting stock offers the more compelling risk-reward at this stage of the cycle.
The Case for DKNG
DraftKings continues to show improving underlying momentum despite near-term noise. Management highlighted accelerating handle growth across core sports, stronger customer retention, and meaningful gains in parlay mix, all of which support structurally higher sportsbook margins over time. iGaming growth also re-accelerated, driven by higher engagement and better monetization per customer. These trends suggest DraftKings is benefiting from scale, product depth, and data-driven promotional efficiency, reinforcing its long-term earnings power even when quarterly results are volatile.
DraftKings’ expanding media partnerships and upcoming product initiatives add another layer of optionality. Management emphasized disciplined capital allocation, including a larger share repurchase authorization as free cash flow ramps. At the same time, the company plans to be measured in newer initiatives, targeting faster payback periods than legacy sportsbook investments. This balance, leaning into growth while tightening return thresholds, signals a maturing business model transitioning from land-grab mode toward shareholder returns.
A key risk remains the inherent volatility of sportsbook results. Customer-friendly sports outcomes had an outsized negative impact on recent revenue and EBITDA, underscoring how short-term results can swing sharply even when demand trends are strong. While management argues that these effects normalize over time, quarter-to-quarter earnings visibility remains limited, which can pressure the stock during unfavorable betting cycles.
DraftKings continues to invest heavily in new initiatives, technology, and market expansion, which may impact near-term profitability. Guidance revisions reflect not only adverse outcomes but also incremental spending tied to product launches and growth opportunities. Until these investments fully scale, margins may remain uneven, particularly compared with peers that already generate steadier cash flows. This makes DKNG better suited for investors with a longer time horizon and tolerance for volatility.
The Case for PENN
One of PENN’s biggest positives is its strategic reset in digital. Management made the deliberate decision to exit the ESPN BET partnership early and refocus on assets it fully controls, particularly theScore Bet in North America and Hollywood iCasino. This move simplifies the business, removes heavy fixed marketing costs, and gives PENN greater flexibility to target higher-return customer cohorts. Notably, the company retains ownership of the customer database built during the ESPN partnership, preserving long-term value while resetting unit economics ahead of 2026.
Another key strength is the accelerating momentum in iCasino, which management increasingly views as a profit engine rather than a loss leader. In the third quarter, PENN delivered record North American iCasino revenue, driven by strong cross-sell from online sports betting and rapid growth in monthly active users. Management emphasized improving retention, faster product innovation, and tighter CRM execution, all of which are lifting customer lifetime value. With online sports betting positioned primarily as a top-of-funnel tool, PENN appears better aligned to generate sustainable digital profitability over time.
PENN’s regional casino business remains a stabilizing force and a differentiator versus digital-only peers. Core demand trends were described as stable, with particularly strong performance in several Midwest markets and encouraging early results from the new Hollywood Casino Joliet. Management highlighted growing visitation, higher spend per visit, and database expansion, much of it incremental rather than cannibalistic. Combined with a visible development pipeline and disciplined capital allocation, the land-based segment continues to generate meaningful cash flow to support buybacks, deleveraging and growth investments.
On the downside, execution risk in the Interactive segment remains a near-term concern. While management reaffirmed its goal of reaching breakeven or better in digital operations in 2026, the transition away from ESPN BET introduces uncertainty around customer retention and short-term losses. The fourth quarter is expected to remain pressured due to rebranding costs and softer online sports betting volumes. Until theScore Bet proves it can scale profitably in the United States, investors must be comfortable with continued volatility in PENN’s digital earnings profile.
Stock Performance & Valuation
As witnessed from the chart below, in the past six months, DraftKings’ shares have lost more than PENN.
Price Performance
Image Source: Zacks Investment Research
Considering valuation, DraftKings is currently trading at a premium compared with PENN Entertainment on a forward 12-month price-to-sales (P/S) ratio basis.
P/S (F12M)
Image Source: Zacks Investment Research
Comparing EPS Estimate Trends of DKNG & PENN
The Zacks Consensus Estimate for DKNG’s 2026 earnings estimates implies a year-over-year improvement of 100.4%. The 2026 EPS estimates have decreased over the past 60 days.
DKNG’s EPS Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PENN’s 2026 earnings estimates implies a year-over-year improvement of 116.4%. The 2026 EPS estimates have decreased over the past 60 days.
PENN’s EPS Trend
Image Source: Zacks Investment Research
Wrapping Up
Overall, PENN Entertainment looks better positioned than DraftKings right now due to its more balanced and resilient business model. PENN’s digital reset reduces risk and sharpens its focus on profitability, while iCasino momentum and steady cash flow from regional casinos provide stability and funding flexibility. DraftKings, in contrast, remains more exposed to sportsbook volatility and ongoing investment needs, which can weigh on earnings visibility. As the industry matures, PENN’s diversified structure and clearer path to sustainable returns give it the edge at this stage.
Presently, DKNG carries a Zacks Rank #5 (Strong Sell), whereas PENN carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.