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DraftKings was upgraded to Buy from Neutral by Bank of America on Oct. 8, with analyst Shaun Kelley maintaining a $27 price target as the stock traded around $19.53 after a sharp one-month decline.
The call matters because DraftKings shares have fallen 19% over the past month even as the broader market was little changed, and Bank of America said Wall Street expectations for the company may now be nearing a bottom. The note also highlighted prediction markets as a central issue for the sports betting operator and for the wider sector.
Kelley had been on the sidelines on DraftKings for the past year, according to 24/7 Wall St., because of concerns tied to prediction markets and the risk they posed to estimates. In the new note, he described prediction markets as a “win-win outcome for DraftKings” and pointed to “reduced cannibalization risk” in the analyst’s rationale for the upgrade.
Sector selloff has hit DraftKings and peers
DraftKings’ slide has come alongside broader weakness in gambling-linked stocks. Over the same month, Flutter Entertainment shares were down 20%, MGM Resorts International fell 26%, and the Roundhill Sports Betting & iGaming ETF dropped 13%. By comparison, the SPDR S&P 500 ETF Trust was up 0.3%.
That backdrop makes the upgrade notable for investors and industry watchers tracking whether sentiment around U.S. sports betting operators is stabilizing after a broad selloff.
DraftKings also entered the period with a recent earnings miss behind it. The company reported Q2 2026 revenue of $1.44 billion, missing expectations, according to the source report.
Prediction markets remain a key business risk to watch
A major part of the debate around DraftKings remains the growth of prediction market platforms such as Kalshi and Polymarket, which allow users to trade contracts tied to event outcomes, including sports results.
The regulatory path for those platforms remains uncertain, and that uncertainty has become part of the investment case around traditional sportsbook operators. DraftKings itself operates a proprietary prediction-market exchange and has indicated it will continue spending on that product.
What comes next is likely straightforward: DraftKings’ next quarterly results will test whether Bank of America’s bottoming thesis holds up, and whether management commentary offers more clarity on spending and competitive pressure tied to prediction markets.
Source: As reported by David Moadel.
