DraftKings Poised for Workforce Reduction Amidst Strategic Shift Towards AI-Driven Efficiency

Leading U.S. sports betting and iGaming giant, DraftKings, is anticipated to announce a significant restructuring of its workforce, with projections pointing to a new round of layoffs. This strategic move aims to foster a more agile operational model and generate substantial cost efficiencies, building on previous efforts to streamline its employee base.

Industry analysts suggest that the company's deepening integration of Artificial Intelligence (AI) technologies is enabling it to optimize its operations without compromising service delivery. This transition is expected to yield approximately $30 million in annual savings.

This would mark the second instance of significant staff reductions at DraftKings within a span of recent years. The last notable workforce optimization occurred in February 2023, when the company reduced its headcount by 3.5%, affecting 140 employees. While the precise number of individuals impacted in the upcoming reduction remains undisclosed, estimates suggest it could affect as much as 5% of its current staff.

Jordan Bender, an analyst at Citizens Equity Research, corroborated these developments, indicating that the restructuring and subsequent layoffs are expected to coincide with the publication of DraftKings' fourth-quarter results and its 2026 EBITDA guidance.

Bender provided a financial breakdown, stating, "We estimate the headcount reduction, if close to 5% of employees, will result in annual cost savings of ~$30M, based on the median DraftKings employee making ~$100k per year." He further elaborated on the strategic timing: "That said, the timing of the staff reduction, a week and a half following earnings and guidance, suggests the cost savings were most likely contemplated in the 2026 EBITDA guidance of $700 million to $900 million EBITDA."

While AI's role is not directly cited as the sole driver for the staff reductions, Bender highlighted several areas where advanced AI has demonstrated clear value in reducing operational expenditures. Generative AI, for instance, has simplified tasks across various departments, including software coding, customer service through chatbots, and the drafting of legal documents. Notably, AI already plays a critical role in the company's promotional spending strategy, determining 70% of its budget allocation.

Looking ahead, Bender anticipates a continued trend of cost structure rationalization for DraftKings. He concluded, "Overall, we could expect more cost structure rationalization in the coming quarters and years as the business continues to benefit from AI and maturing markets."