DraftKings Will not Really feel A lot Ache From Faculty Prop Betting Ban


Posted on: March 28, 2024, 03:34h. 

Final up to date on: March 28, 2024, 03:44h.

A proposed ban on school proposition wagers would possible have minimal affect on DraftKings (NASDAQ: DKNG), based on sell-side analysts protecting the corporate.

DraftKings
Staff at DraftKings headquarters. Analysts say the specter of a ban on school prop bets may have minimal affect on the gaming firm. (Picture: CNBC)

A number of analysts chimed in on the matter on Thursday, a day after shares of the web sportsbook operator and rival Flutter Leisure (NYSE: FLUT), the mum or dad firm of FanDuel, slumped on information that NCAA President Charlie Baker stated the group desires to halt prop bets on school athletic occasions to bolster integrity.

Analysts acknowledged that whereas traders overreacted to Wednesday’s information, as highlighted by the slumps endured by DraftKings and Flutter, the general impact of misplaced school prop bets is probably going minimal to these operators and their rivals. In a word to shoppers on Thursday, Financial institution of America analyst Shaun Kelley stated alterations within the school prop betting panorama are “de minimus” for DraftKings.

Relatively, he views the specter of larger taxes on on-line sports activities betting as probably extra regarding to the younger business.

Different Analysts Defend DraftKings

With New Jersey policymakers floating a plan to probably increase taxes on iGaming and sports activities betting, and Sen. Richard Blumenthal (D-CT) saying extra federal oversight of how operators goal “high-value” bettors is required, this week’s information movement for DraftKings, Flutter, and the business at massive has been adverse.

Nevertheless, Wall Avenue continues to be in DraftKings’ nook. JPMorgan instructed shoppers that Wednesday’s sell-off was overdone whereas reiterating an “obese” score and $55 value goal on the inventory. That means upside of 21% from Thursday’s shut.

MoffettNathanson has the same view. The analysis agency acknowledged there’s some headline danger threatening on-line gaming shares, but it surely reiterated a “purchase” score on DraftKings whereas boosting its value forecast on the inventory to $55 from $52.

Of the 32 analysts with rankings on DraftKings, 24 grade the inventory the equivalents of “robust purchase” or “purchase.”

A Totally different View

JMP Securities analyst Jordan Bender had a considerably totally different tackle the school prop betting ban. In a word to shoppers on Thursday, he identified that in 2023, school sports activities drove $1.6 billion of income for regulated US on-line sportsbook operators whereas accounting for about 15% of the general deal with.

He added that with prop wagers growing in recognition, $200 million in income may very well be in danger, based mostly on 2023 figures, if a ban is enforced.

On the finish of the day, bettors will discover a technique to wager on occasions and gamers, and we consider the trouble to ban particular person participant betting will possible solely push gamers again offshore, whereas we estimate over 50% of wagers immediately are in the USA,” wrote Bender.

He did word that the combo of participant prop bets on school video games is decrease than what’s discovered on skilled sports activities.

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