DraftKings Would Feel Little Impact from College Prop Betting Ban, Say Analysts
A proposed forbiddance on college proposition wagers would potential experience minimum impact on DraftKings (NASDAQ: DKNG), according to sell-side analysts covering the company.
Several analysts chimed in on the thing on Thursday. That was a solar day after shares of the online sportsbook manipulator and competitor Flutter Entertainment (NYSE: FLUT), the parent keep company of FanDuel, slumped on word that NCAA President Charlie Baker said the organization wants to hold prop bets on college athletic events to bolster up integrity.
Analysts acknowledged that spell investors overreacted to Wednesday’s news, as highlighted past the slumps endured by DraftKings and Flutter, the boilers suit core of lost college prop bets is likely minimum to those operators and their rivals. In a mention to clients on Thursday, Bank of America psychoanalyst Shaun Kelley said alterations in the college prop betting landscape painting are “de minimus” for DraftKings.
Rather, he views the specter of higher taxes on online sports betting as potentially more concerning to the offspring industry.
Other Analysts Defend DraftKings
With New Jersey policymakers natation a programme to potentially wage increase taxes on iGaming and sports betting, and Sen. Richard Blumenthal (D-CT) saying to a greater extent federal oversight of how operators target area “high-value” bettors is needed, this week’s news stream for DraftKings, Flutter, and the industry at big has been negative.
However, Wall Street is relieve in DraftKings’ corner. JPMorgan told clients that Wednesday’s sell-off was overdone, piece reiterating an “overweight” rating and $55 terms target on the stock. That implies upside of 21% from Thursday’s close.
MoffettNathanson has a similar view. The research truehearted acknowledged on that point is some headline risk threatening online gaming stocks. But it reiterated a “buy” rating on DraftKings patch boosting its terms calculate on the stock up to $55 from $52.
Of the 32 analysts with ratings on DraftKings, 24 grade the stock up the equivalents of “strong buy” or “buy.”
A Different View
JMP Securities psychoanalyst Jordan River Bender had a somewhat different get hold of on the college prop betting ban. In a note of hand to clients on Thursday, he pointed come out that inward 2023, college sports drove $1.6 1000000000000 of revenue for regulated U.S. online sportsbook operators, spell method of accounting for nigh 15% of the boilersuit handle.
He added that with prop wagers increasing in popularity, $200 meg in revenue could live at risk, based on 2023 figures, if a forbidding is enforced.
At the ending of the day, bettors will bump a way to wager on events and players, and we trust the sweat to forbidding single(a) participant betting testament potential only when pushing players backward offshore, while we approximate over 50% of wagers today are inwards the United States,” wrote Bender.
He did notation that the mixing of participant prop bets on college games is let down than what’s found on pro sports.
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