DraftKings (DKNG) reported Q4 2025 revenue of $1.99B, up 42.8% year-over-year, with adjusted EPS of $0.36 beating consensus by 100%, and achieved its first full-year GAAP net income while expanding into DraftKings Predictions.
Penn Entertainment (PENN) posted 73% year-over-year online sportsbook growth and 40% iCasino growth in Q4 2025, with its Interactive segment achieving positive adjusted EBITDA in December following the strategic reset and ESPN partnership termination.
A broad market rally triggered by President Trump’s Iran comments is lifting beaten-down consumer cyclicals including sports betting stocks, which have been oversold despite measurable operational progress in their core businesses.
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DraftKings (NASDAQ:DKNG) stock is up 5% and Penn Entertainment (NASDAQ:PENN) stock is up 7% in early trading on Monday. The simultaneous lift suggests something bigger is at play beyond individual company news.
Part of the story is the broader market. The NASDAQ 100 is surging today on comments from President Trump regarding Iran, giving risk assets a tailwind. When sentiment shifts market-wide, beaten-down consumer cyclicals tend to catch a bid fast, and sports betting stocks fit that profile right now.
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Both DKNG and PENN have had a rough stretch. DraftKings shares were down 31% year-to-date heading into today’s session, while Penn Entertainment shares were down about 7% year-to-date. Today’s moves are helping to ease those losses, and they raise a fair question: is the sector finding a floor?
The previous selloff in DKNG stock has been hard to square with the underlying business. DraftKings posted Q4 2025 revenue of $1.99 billion, up 42.8% year-over-year, and adjusted EPS of $0.36 against a consensus estimate of $0.18. The company also reported its first-ever full-year GAAP net income of $3.71 million, a milestone that often gets glossed over in the noise around guidance.
The stock fell after that report anyway. Investors focused on 2026 guidance of $6.5 billion to $6.9 billion in revenue and $700 million to $900 million in adjusted EBITDA, which came in below some expectations due to planned investment in DraftKings Predictions, a federally regulated event contracts product under CFTC oversight. That’s a near-term drag on margins, but also an expansion into a new addressable market.
Meanwhile, management has been backing the stock with its own capital. DraftKings recently expanded its share buyback program, a signal that the board sees the current price as a discount. The company repurchased $571.5 million worth of shares during fiscal year 2025.
DraftKings CEO Jason Robins put it directly on the Q4 call:
“We closed 2025 on a high note. Fourth quarter revenue increased 43% year-over-year and we achieved records for revenue and Adjusted EBITDA. Our core business is strong as we enter 2026.”
DraftKings also added the Mindway AI tool to its Responsible Gaming Center, positioning the company as a sustainable, compliant operator in a regulatory environment that keeps tightening.
Penn Entertainment’s story is messier, but the direction is clearer than the stock price suggests. The company spent 2025 absorbing a painful strategic reset, including terminating its ESPN partnership, which eliminates $150 million in annual payments, and writing down $825 million in goodwill in its Interactive segment. Those charges are behind it now.
What’s emerging looks more promising. In Q4 2025, Penn’s online sportsbook revenue grew 73% year-over-year and iCasino revenue grew 40%, following the rebrand to theScore Bet. The Interactive segment, which had been a persistent money pit, achieved positive adjusted EBITDA in December alone. That’s the inflection point the market has been waiting on.
Penn Entertainment also announced a new corporate organizational structure on January 5, 2026, a structural signal that management is serious about running a leaner operation. CEO Jay Snowden framed the 2026 outlook this way: “We are excited about the year ahead as we expect to generate year-over-year segment adjusted EBITDAR growth of 20% in 2026.”
Furthermore, Penn Entertainment authorized a new $750 million share buyback program beginning January 1, 2026. At a market cap of roughly $1.95 billion, that buyback authorization reflects management’s view that the stock is deeply undervalued.
Sports betting stocks have been weighed down by state tax increases, hold rate volatility, and heavy investment cycles. The question today is whether the sector’s fundamentals are finally catching up to the pessimism baked into prices. For more context on how the broader gaming landscape is shifting, the March 13 breakdown of casino sector stocks worth watching lays out the competitive dynamics well.
Both DraftKings and Penn Entertainment enter 2026 with cleaner stories than a year ago. DraftKings is profitable on a GAAP basis for the first time and expanding into new product categories. Moreover, Penn Entertainment has cut its biggest cost drag, rebranded its digital product, and hit its first monthly Interactive EBITDA milestone.
Today’s rally in DKNG and PENN stocks has a macro component, and the underlying businesses are showing measurable progress on the metrics that matter most. For both companies, if operational momentum from Q4 2025 carries into the first half of 2026, execution on those metrics will depend on whether management delivers on its stated targets.
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