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DraftKings has fallen on hard times. Under pressure from prediction markets, the betting site has seen its share price fall 44% in the past year and has endured significant layoffs. In March, one of DraftKings’ cofounders, Matthew Kalish, stepped down as president—but not before persuading the board to approve a series of potentially lucrative deals to benefit his new marketing company.
As set out in a recent regulatory filing, DraftKings has agreed to pay up to $30 million in a marketing agreement with media platform HardScope, Kalish’s newest endeavor to help scale creator brands. Under the terms of the arrangement, HardScope will broker deals with podcast hosts and other figures to promote DraftKings, and is entitled to keep a commission of up to 14%.
The arrangement is noteworthy because it contemplates DraftKings making a large marketing outlay to a company insider at a time when the firm is struggling and because it appears to be the product of a board structure that gives an unusual amount of power to its CEO. The marketing deal raises questions about corporate oversight and could, in the near term, supply additional ammunition to short sellers that have been aggressively betting against DraftKings’ share price for the bulk of 2026.
The “big red flag”
In November, DraftKings announced that Kalish would leave his role as president after 14 years with the company. He formally stepped down four months later. The company announced the news in a quarterly filing dated September 2025 that stated only that Kalish and his fellow cofounders, Jason Robins and Paul Liberman, had “mutually agreed” to his departure.
During the months between his announced and actual departure, Kalish formally launched HardScope in December, according to a company press release. Kalish wholly owns the company, which, according to its website, says it connects “brands and fans with the most influential streamers built to lead culture.”
Six weeks before Kalish left DraftKings, the company entered into the marketing arrangement with HardScope, which gives the betting site the option to spend up to $30 million over three years. The deal built on an earlier agreement, signed in June 2025, that allowed DraftKings to pay HardScope up to $600,000 for promotional services.
“Fees are payable only when an applicable statement of work and related talent agreement are executed, and the applicable services and deliverables are provided,” a DraftKings spokesperson told Fortune, while Kalish noted the company has the right but not the obligation use HardScope’s services.
Both parties told Fortune that the arrangement was approved by DraftKings’ independent audit committee, while Kalish added the 14% commission was more favorable than what the company has been paying to other marketing agencies.
The deal, however, may not sit comfortably with all shareholders since, even though the audit committee is independent, its members are chosen by the company’s board on which all three DraftKings cofounders, including Kalish, have a seat. And notably, Robins the CEO and one of the cofounders, controls roughly 88% of voting power even though his shares represent only around 2% of the company’s economic interest.
That structure would appear to give Robins outsize influence on whether to approve the $30 million payment to his cofounder’s new marketing company. Jesse Fried, a corporate governance expert at Harvard Law School, described that imbalance as a “big red flag.”
“It looks like DraftKings created an arrangement where somebody with only a tiny amount of economic exposure to the company could control it,” he said. “It’s a very extreme governance arrangement that raises lots of problems.”
Separate from the HardScope arrangements, DraftKings gave Kalish a lucrative exit package that included an estimated $18 million in accelerated stock awards. The company also agreed to cover his home-security and COBRA health-insurance costs through March 2027.
Sportsbooks under pressure
When DraftKings went public in 2020, sports betting was booming in the U.S. after a Supreme Court ruling opened the door to legalized wagers across the country. The company’s stock would go on to soar during the pandemic but, in the last year, the arrival of major new competition in the form of prediction markets has undercut its market share. Leading sites like Kalshi and Polymarket have won over bettors with massive marketing campaigns and novel wagers, but their growth has also been spurred by a regulatory quirk that permits them to cater to 18-year-old bettors, even as sportsbooks like DraftKings can only serve those 21 and older.
To address that threat, DraftKings has tried to adapt. In December, the company launched its DraftKings Predictions app to compete and, since the beginning of 2025, has shifted toward prediction markets by adding event contracts to its main offerings. However, its efforts have not proved strong enough to protect its once-thriving business model.
According to the company’s most recent quarterly filing, DraftKings reported a quarterly loss of more than $67 million, reversing nearly $158 million in net income a year earlier. Revenue fell more than 4% even as the company spent over $320 million on sales and marketing, bringing its cumulative deficit to nearly $6.5 billion. In its most recent annual filing, DraftKings said that increasing competitive pressures in the space pose a threat to the company’s business model.
All of this has made DraftKings a target of short sellers, who have made a wager of their own: that the price of the betting site will continue to fall. Short sellers have made an estimated $471 million betting against the company’s shares so far this year, according to data analytics firm S3 Partners. The firm estimates that investors have sold short roughly $879 million worth of DraftKings stock, a sign that many are still positioning for further declines.
As for Kalish, who helped found DraftKings in 2012, he has taken to airing his frustrations on social media. The day after stepping down as president, he returned to X for the first time in four years, and has repeatedly criticized prediction markets, particularly Kalshi’s betting model and regulatory standing in the United States.
It’s my first day in 14 years not working at DraftKings! I’m very proud of the company and the work that went into building such a durable leader.
I appreciate everyone I met along the way, the partners, and most importantly everyone who played the games. I love gambling and…
However, none of these efforts have done much to quell fears over DraftKings’ future at a time when its market capitalization has fallen nearly 42% over the past year, reducing its value to about $13 billion.
This story was originally featured on Fortune.com
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