Sports Betting Stocks’ Kalshi-Induced Slides Overblown, Say Analysts
Posted on: September 30, 2025, 04:10h.
Last updated on: September 30, 2025, 04:10h.
- DraftKings, Flutter, others tumbled today on reports of elevated volume on Kalshi
- Parlays coming to the prediction market didn’t help matters
- It’s possible Kalshi volume is being double-counted, says one analyst
Sports betting stocks were walloped Tuesday as investors were spooked by reports of surging volume on Kalshi and news that the prediction markets giant is offering same-game football parlays, but some analysts believe the sell-offs are overdone.
DraftKings (NASDAQ: DKNG) plunged 11.37% on volume that was more than quadruple the daily average while FanDuel parent Flutter Entertainment (NYSE: FLUT) shed about 10.50% on turnover that was more than triple the norm. Rush Street Interactive (NYSE: RSI), another pure-play iGaming/sports betting stock, dipped 8.39% on above-average volume.
The sports betting stocks were taken to task as market participants absorbed news that Kalshi volume on Saturday, Sept. 27 and Sunday, Sept. 28 smashed the previous record set on Election Day 2024. As Texas Capital analyst David Bain points out, there may be good reasons why today’s sell-offs by DraftKings and friends are overdone.
We believe online gaming stock weakness relates to media reports citing Kalshi’s new trading record over the weekend of ~$540 million,” notes the analyst. “Notably, $540 million was stated as a ‘volume’ number, which refers to handle (and we are not sure if Kalshi is counting both sides of the trade, which would true-up/down to $270 million).”
In other words, Kalshi’s purported handle may not be big as previously thought and even if it is, it will be dwarfed by the $17 billion handle Bain estimates regulated domestic sportsbooks will notch this month.
Prediction Markets Offer Inferior Product, Says Analyst
While there’s no denying that football season is fostering volume surges on platforms such as Kalshi, Robinhood and other event contract exchanges, that doesn’t imply those firms have the better sports wagering product.
Bain says that’s not the case. Other analysts have pointed out that through four weeks of the NFL season, Kalshi pricing on money lines and totals has been broadly inferior relative to DraftKings and FanDuel. That could be a sign that in states where online sports betting is permitted, prediction markets won’t make much headway against gaming companies.
“While same-game parlays have been introduced, we believe prediction market wagering options and overall content/functionality remains thin,” adds Bain. “However, in a jurisdiction with little-to no-other online gaming betting option, we understand the appeal.”
Translation: Prediction markets may be attractive to bettors in California or Texas, but less so to their counterparts in states such as Illinois, Nevada, New Jersey, New York, and Pennsylvania.
Analyst Bullish on Flutter
FanDuel Flutter is the largest online gaming company in the world and unlike rival DraftKings, it has significant international exposure. Alone, that can buffer some of the stock-level sting associated with prediction markets competition. Plus, Wall Street still likes the stock.
In a note to clients today, Jefferies analyst James Wheatcroft reiterated a “buy” rating and $380 price target on sports betting stock, implying upside of nearly 50% from Tuesday’s closing price.
The analyst cites a variety of factors supporting the thesis that today’s slide by Flutter was overdone. Those include FanDuel’s depth of product offering and promotional spending — traits not found with prediction markets. Wheatcroft points out states where online sports betting is legal could take steps to limit or ban prediction markets, adding that even if Congress legalizes yes/no exchanges, that work in Flutter’s favor because it’s established in the space in Europe and such action would level the playing field for gaming companies.
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