DraftKings, Flutter Drop as BofA Downgrades on Gambling Market Risks
Shares in DraftKings closed down 6.4% on Tuesday, after touching its lowest level in more than two years earlier in the day.
Photographer: Gabby Jones/BloombergDraftKings Inc. and Flutter Entertainment Plc shares dropped on Tuesday after Bank of America Corp. downgraded the online sports betting operators, citing a variety of risks to the gambling market including the increasing prevalence of prediction markets.
Analysts led by Shaun Kelley moved to neutral from buy on both DraftKings and Flutter, expressing concern over the so-called structural hold, or the implied win margin that should apply to a given mix of bets, as well as perennial headwinds from taxes. As for threats posed by prediction markets, headwinds may arize as business models evolve.