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DKNG vs. PENN: Which Sports Betting Stock Is the Better Buy Now?
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Key Takeaways
DKNG's digital-first strategy and product innovation support growth across sports betting and iGaming.
DraftKings expects 2026 revenues of $6.5-$6.9 billion and adjusted EBITDA of $700-$900 million.
PENN trades at a lower 9.65X forward P/E, but DraftKings has stronger digital growth prospects.
The online sports betting industry continues to attract investor attention as companies compete to capture a larger share of the growing digital gaming market. DraftKings Inc. (DKNG - Free Report) has built the business around online sports wagering and iGaming, while PENN Entertainment, Inc. (PENN - Free Report) combines a regional casino portfolio with its digital betting operations.
Although both companies are targeting growth in online gambling, their different business models, competitive strategies and paths to profitability create an interesting investment comparison. So, between DKNG and PENN, which sports betting stock offers the more compelling opportunity for investors today? The answer depends on their growth prospects, financial performance, execution risks and current valuations.
The Case for DKNG
DraftKings’ expanding digital ecosystem and improving customer economics support its long-term growth prospects. The company is strengthening its competitive position by integrating online sports betting, iGaming, fantasy sports, horse racing and prediction markets under a broader platform strategy. Its focus on product innovation, personalized customer experiences and cross-selling opportunities can help improve customer retention and lifetime value. DraftKings is also investing in its technology and proprietary capabilities to gain greater control over pricing, trading and platform economics. DKNG’s vertically integrated approach to prediction markets, which includes its own brokerage, exchange and market-making operations, could provide additional opportunities to capture value and differentiate the offering from competitors.
DraftKings’ customer acquisition capabilities and operating efficiency provide further reasons for optimism. Management highlighted improvements in customer acquisition costs, stronger customer engagement and continued gains in sportsbook handle share during its second-quarter 2026 earnings call. The company is also working to improve its iGaming business through product launches and enhanced promotional features.
Meanwhile, disciplined expense management and greater control over its technology infrastructure could support margin expansion as the business scales. Management maintained its fiscal 2026 revenue guidance of $6.5-$6.9 billion and adjusted EBITDA outlook of $700-$900 million, reflecting confidence in the core business despite near-term operating pressures. DraftKings also expects the core business to generate approximately $1 billion in adjusted EBITDA in 2026, highlighting its underlying earnings potential.
However, DraftKings faces execution risks as it expands into prediction markets and pursues further growth. The company expects substantial investment in its new offering, with management indicating incremental prediction-market investment of $200-$300 million in 2026. These expenses could weigh on near-term profitability if customer acquisition, retention and monetization do not develop as expected. Sports betting results are also susceptible to unfavorable game outcomes, while aggressive promotional spending by competitors could pressure margins. In addition, regulatory uncertainty surrounding prediction markets creates risks for the business's expansion plans. DraftKings will need to convert its growing customer base into sustainable earnings and free cash flow while maintaining spending discipline.
The Case for PENN
PENN Entertainment benefits from a diversified gaming portfolio and a strong position in regional casino markets. Its established land-based operations provide a foundation for generating cash flow, while investments in property upgrades, hotel facilities and non-gaming amenities are helping attract new customers and encourage repeat visits. The company’s PENN Play loyalty program and omnichannel strategy offer additional opportunities to strengthen customer relationships and cross-sell between its retail and digital platforms.
Recent development projects, including hotel expansions and upgraded casino facilities, could support growth by improving the customer experience, attracting higher-value guests and increasing spending per visit. Management also sees favorable industry conditions, including limited new competitive supply in several key markets, as a potential tailwind for its retail business.
PENN’s improving operating efficiency and focus on balance-sheet strength add to its investment appeal. The company is pursuing a more disciplined digital strategy, prioritizing profitable customers and reducing spending on lower-value segments to improve marketing returns. Its U.S. iCasino operations and Canadian digital business are key growth areas, with the standalone Hollywood Casino app gaining traction and the company seeking to build on cross-selling opportunities between online sports betting and casino gaming.
At the same time, cost controls, corporate overhead optimization and stronger cash flow are supporting debt reduction. Management has also identified share repurchases and investments in existing properties as potential uses of capital, providing flexibility to enhance shareholder value while maintaining a focus on deleveraging.
However, PENN’s digital business remains a key execution challenge. Although Interactive segment profitability is improving, the company still expects an adjusted EBITDA loss of $20 million for 2026, including investment in its Alberta launch. Intense competition in online sports betting and prediction markets could require additional promotional spending, limiting the pace of margin improvement.
PENN’s reduced marketing spend on lower-value customers may improve returns over time, but it can also constrain near-term revenue growth. Moreover, the company’s substantial lease obligations and ongoing investment requirements make sustained cash flow generation and debt reduction important priorities. PENN must demonstrate that the digital operations can achieve consistent profitability while its retail business continues to fund growth and strengthen the balance sheet.
How Does the Zacks Consensus Estimate Compare for DKNG & PENN?
The Zacks Consensus Estimate for DraftKings’ 2026 sales and earnings per share (EPS) indicates year-over-year increases of 10.3% and 28.8%, respectively. In the past 30 days, the consensus estimate for 2026 EPS has remained stable.
DKNG Earnings Estimate Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PENN Entertainment’s 2026 sales implies year-over-year growth of 6.5%, while the EPS estimate indicates a gain of 116.3%. In the past 30 days, the consensus estimate for 2026 EPS has declined, as shown in the chart.
PENN Earnings Estimate Trend
Image Source: Zacks Investment Research
Price Performance & Valuation of DKNG & PENN
DraftKings stock has lost 10.2% in the past six months, outperforming the industry’s decline of 15.7%. Meanwhile, PENN’s shares have declined 16.8% over the same period.
DKNG & PENN Stock Six-Month Price Performance
Image Source: Zacks Investment Research
DraftKings trades at a forward 12-month P/E multiple of 13.05X, below the industry average of 21.96X. PENN trades at a lower forward 12-month P/E multiple of 9.65X.
Image Source: Zacks Investment Research
Investment Consideration
DraftKings appears slightly better positioned than PENN at present, supported by its digital-first business model, strong customer acquisition capabilities, product innovation and opportunities to improve profitability as the platform expands. Its focus on prediction markets, iGaming and technology integration could strengthen customer engagement and create additional avenues for long-term growth.
PENN, meanwhile, benefits from the established regional casino operations, improving cash flow and ongoing deleveraging efforts, but its digital business still faces profitability challenges and intense competition. Although PENN trades at a lower valuation, DraftKings’ relatively better share-price performance and stronger digital growth prospects give it a slight edge. With both stocks carrying a Zacks Rank #3 (Hold), neither presents an unequivocal buying signal, but DKNG appears to offer a more compelling balance of growth potential and competitive positioning at this stage.
View the Zacks #1 Rank List
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DKNG vs. PENN: Which Sports Betting Stock Is the Better Buy Now?
Key Takeaways
The online sports betting industry continues to attract investor attention as companies compete to capture a larger share of the growing digital gaming market. DraftKings Inc. (DKNG - Free Report) has built the business around online sports wagering and iGaming, while PENN Entertainment, Inc. (PENN - Free Report) combines a regional casino portfolio with its digital betting operations.
Although both companies are targeting growth in online gambling, their different business models, competitive strategies and paths to profitability create an interesting investment comparison. So, between DKNG and PENN, which sports betting stock offers the more compelling opportunity for investors today? The answer depends on their growth prospects, financial performance, execution risks and current valuations.
The Case for DKNG
DraftKings’ expanding digital ecosystem and improving customer economics support its long-term growth prospects. The company is strengthening its competitive position by integrating online sports betting, iGaming, fantasy sports, horse racing and prediction markets under a broader platform strategy. Its focus on product innovation, personalized customer experiences and cross-selling opportunities can help improve customer retention and lifetime value. DraftKings is also investing in its technology and proprietary capabilities to gain greater control over pricing, trading and platform economics. DKNG’s vertically integrated approach to prediction markets, which includes its own brokerage, exchange and market-making operations, could provide additional opportunities to capture value and differentiate the offering from competitors.
DraftKings’ customer acquisition capabilities and operating efficiency provide further reasons for optimism. Management highlighted improvements in customer acquisition costs, stronger customer engagement and continued gains in sportsbook handle share during its second-quarter 2026 earnings call. The company is also working to improve its iGaming business through product launches and enhanced promotional features.
Meanwhile, disciplined expense management and greater control over its technology infrastructure could support margin expansion as the business scales. Management maintained its fiscal 2026 revenue guidance of $6.5-$6.9 billion and adjusted EBITDA outlook of $700-$900 million, reflecting confidence in the core business despite near-term operating pressures. DraftKings also expects the core business to generate approximately $1 billion in adjusted EBITDA in 2026, highlighting its underlying earnings potential.
However, DraftKings faces execution risks as it expands into prediction markets and pursues further growth. The company expects substantial investment in its new offering, with management indicating incremental prediction-market investment of $200-$300 million in 2026. These expenses could weigh on near-term profitability if customer acquisition, retention and monetization do not develop as expected. Sports betting results are also susceptible to unfavorable game outcomes, while aggressive promotional spending by competitors could pressure margins. In addition, regulatory uncertainty surrounding prediction markets creates risks for the business's expansion plans. DraftKings will need to convert its growing customer base into sustainable earnings and free cash flow while maintaining spending discipline.
The Case for PENN
PENN Entertainment benefits from a diversified gaming portfolio and a strong position in regional casino markets. Its established land-based operations provide a foundation for generating cash flow, while investments in property upgrades, hotel facilities and non-gaming amenities are helping attract new customers and encourage repeat visits. The company’s PENN Play loyalty program and omnichannel strategy offer additional opportunities to strengthen customer relationships and cross-sell between its retail and digital platforms.
Recent development projects, including hotel expansions and upgraded casino facilities, could support growth by improving the customer experience, attracting higher-value guests and increasing spending per visit. Management also sees favorable industry conditions, including limited new competitive supply in several key markets, as a potential tailwind for its retail business.
PENN’s improving operating efficiency and focus on balance-sheet strength add to its investment appeal. The company is pursuing a more disciplined digital strategy, prioritizing profitable customers and reducing spending on lower-value segments to improve marketing returns. Its U.S. iCasino operations and Canadian digital business are key growth areas, with the standalone Hollywood Casino app gaining traction and the company seeking to build on cross-selling opportunities between online sports betting and casino gaming.
At the same time, cost controls, corporate overhead optimization and stronger cash flow are supporting debt reduction. Management has also identified share repurchases and investments in existing properties as potential uses of capital, providing flexibility to enhance shareholder value while maintaining a focus on deleveraging.
However, PENN’s digital business remains a key execution challenge. Although Interactive segment profitability is improving, the company still expects an adjusted EBITDA loss of $20 million for 2026, including investment in its Alberta launch. Intense competition in online sports betting and prediction markets could require additional promotional spending, limiting the pace of margin improvement.
PENN’s reduced marketing spend on lower-value customers may improve returns over time, but it can also constrain near-term revenue growth. Moreover, the company’s substantial lease obligations and ongoing investment requirements make sustained cash flow generation and debt reduction important priorities. PENN must demonstrate that the digital operations can achieve consistent profitability while its retail business continues to fund growth and strengthen the balance sheet.
How Does the Zacks Consensus Estimate Compare for DKNG & PENN?
The Zacks Consensus Estimate for DraftKings’ 2026 sales and earnings per share (EPS) indicates year-over-year increases of 10.3% and 28.8%, respectively. In the past 30 days, the consensus estimate for 2026 EPS has remained stable.
DKNG Earnings Estimate Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PENN Entertainment’s 2026 sales implies year-over-year growth of 6.5%, while the EPS estimate indicates a gain of 116.3%. In the past 30 days, the consensus estimate for 2026 EPS has declined, as shown in the chart.
PENN Earnings Estimate Trend
Image Source: Zacks Investment Research
Price Performance & Valuation of DKNG & PENN
DraftKings stock has lost 10.2% in the past six months, outperforming the industry’s decline of 15.7%. Meanwhile, PENN’s shares have declined 16.8% over the same period.
DKNG & PENN Stock Six-Month Price Performance
Image Source: Zacks Investment Research
DraftKings trades at a forward 12-month P/E multiple of 13.05X, below the industry average of 21.96X. PENN trades at a lower forward 12-month P/E multiple of 9.65X.
Image Source: Zacks Investment Research
Investment Consideration
DraftKings appears slightly better positioned than PENN at present, supported by its digital-first business model, strong customer acquisition capabilities, product innovation and opportunities to improve profitability as the platform expands. Its focus on prediction markets, iGaming and technology integration could strengthen customer engagement and create additional avenues for long-term growth.
PENN, meanwhile, benefits from the established regional casino operations, improving cash flow and ongoing deleveraging efforts, but its digital business still faces profitability challenges and intense competition. Although PENN trades at a lower valuation, DraftKings’ relatively better share-price performance and stronger digital growth prospects give it a slight edge. With both stocks carrying a Zacks Rank #3 (Hold), neither presents an unequivocal buying signal, but DKNG appears to offer a more compelling balance of growth potential and competitive positioning at this stage.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.