DraftKings ‘Circumspect’ on Prediction Markets, Says Analyst
Posted on: June 19, 2025, 05:03h.
Last updated on: June 19, 2025, 05:03h.
- Analyst comments arrive amid rumors of a deal between FanDuel, Kalshi
- DraftKings pulled related regulatory application in April
Amid increasing fervor regarding the competitive threat posed by prediction markets to sportsbook operators, DraftKings (NASDAQ: DKNG) appears to be among the gaming companies that won’t rush into the yes/no derivatives arena.
At the Jefferies 2025 Consumer Conference in New York, analyst David Katz met with DraftKings management, coming away with the view that operator isn’t planning to accelerate a possible prediction markets entry over the near-term.
DKNG indicated it would be circumspect about the exploration of prediction markets,” wrote the analyst in a note to clients.
He rates the stock a “buy” with a $60 price target, implying upside of slightly more than 50% from yesterday’s close at $39.60. Domestic financial markets were closed today in observance of the Juneteenth holiday.
Interesting Timing for DraftKings/Prediction Markets Talk
The view, likely an accurate one, that DraftKings has reservations about making a push into prediction markets over the near-term is arguably a case of interesting timing for multiple reasons.
First, reports surfaced last week that FanDuel and Kalshi are discussing a partnership, which could potentially open the door for the DraftKings rival to expand into states, including California and Texas, that don’t currently permit sports betting.
Neither Kalshi nor FanDuel parent Flutter Entertainment (NYSE: FLUT) have publicly confirmed the talks, but when Flutter reported first-quarter results last month, CEO Peter Jackson said the operator is monitoring the sports derivatives scene, adding the company already has experience in the space.
“We already operate what we believe is the world’s largest betting exchange, the Betfair Exchange, and we have vast experience in this space,” he said at the time.
Second, in April, DraftKings pulled an application with the National Futures Exchange (NFA) for an entity known as “DraftKings Predict”, which presumably would have been a competitor to prediction markets such as Kalshi and PredictIt.
How DraftKings, Others May Be Examining Prediction Markets
Online sportsbook operators cannot ignore prediction markets rivals and there’s a sense in the sports wagering industry that if the latter start offering parlays – the bread-and-butter of traditional sportsbooks — they may have no choice but to consider futures market entries of their own.
Katz noted it’s possible gaming companies are already having internal conversations regarding how they can bolster defenses against prediction markets.
“The discussions also focused on the permutations for prediction markets, which appear to be gaining scale with little regulatory headwind, causing operators to determine whether to offer the product on an unregulated basis. Our sense is that buy vs. build explorations are underway for,” added the Jefferies analyst.
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