A proposed censor on college proposition wagers would potential have got minimal impact on DraftKings (NASDAQ: DKNG), according to sell-side analysts covering the company.
Several analysts chimed inwards on the matter on Thursday, a day after shares of the online sportsbook manipulator and contender Flutter Entertainment (NYSE: FLUT), the parent fellowship of FanDuel, slumped on intelligence that NCAA President Charlie Baker said the system wants to hold prop bets on college athletic events to bolster up integrity.
Analysts acknowledged that piece investors overreacted to Wednesday’s news, as highlighted by the slumps endured by DraftKings and Flutter, the boilersuit effect of lost college prop bets is likely minimum to those operators and their rivals. In a mention to clients on Thursday, Bank of America analyst Shaun Kelley said alterations inward the college prop betting landscape are “de minimus” for DraftKings.
Rather, he views the specter of higher taxes on online sports betting as potentially to a greater extent concerning to the immature industry.
Other Analysts Defend DraftKings
With New Jersey policymakers floating a design to potentially bring up taxes on iGaming and sports betting, and Sen. Richard Blumenthal (D-CT) expression to a greater extent federal oversight of how operators mark “high-value” bettors is needed, this week’s news rate of flow for DraftKings, Flutter, and the industry at big has been negative.
However, Wall Street is stock-still in DraftKings’ corner. JPMorgan told clients that Wednesday’s sell-off was overdone piece reiterating an “overweight” rating and $55 cost place on the stock. That implies upside of 21% from Thursday’s close.
MoffettNathanson has a similar view. The explore unfaltering acknowledged in that location is some newspaper headline risk of exposure threatening online gaming stocks, but it reiterated a “buy” rating on DraftKings patch boosting its cost calculate on the caudex to $55 from $52.
Of the 32 analysts with ratings on DraftKings, 24 grade the carry the equivalents of “strong buy” or “buy.”
A Different View
JMP Securities analyst Jordan River Bender had a somewhat different occupy on the college prop betting ban. In a note to clients on Thursday, he pointed come out that in 2023, college sports horde $1.6 one thousand million of revenue for regulated US online sportsbook operators while accounting for almost 15% of the boilersuit handle.
He added that with prop wagers increasing inward popularity, $200 zillion inward revenue could follow at risk, based on 2023 figures, if a ban is enforced.
At the death of the day, bettors testament happen a right smart to wager on events and players, and we trust the elbow grease to forbiddance case-by-case participant betting will potential only thrust players rear offshore, spell we idea o'er 50% of wagers today are in the United States,” wrote Bender.
He did take note that the admixture of participant prop bets on college games is depress than what’s found on professional sports.
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