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Bonus TL;DR
- DraftKings CEO Jason Robins stated the recent stock surge following a regulatory ruling against prediction markets misrepresents the company’s views.
- Investors continue valuing DraftKings based on its core sportsbook business, even as its new DKeX prediction exchange targets massive volume.
DraftKings shares rose after a recent federal appeals court ruling on prediction markets, even as CEO Jason Robins said the stock reaction does not reflect the company’s own view of the sector.
The move matters because it shows how investors are separating DraftKings’ core sportsbook business from the regulatory fight over event contracts, even as the company pushes into prediction markets through its new DKeX exchange.
CNBC reported that after a 9th U.S. Circuit Court of Appeals ruling last month, DraftKings stock rose more than 7% and Flutter shares gained more than 6%. The ruling said sports-related event contracts on prediction markets were not swaps and could not be overseen by the Commodity Futures Trading Commission. The CFTC, however, argues that all event contracts are swaps and fall under its jurisdiction.
Robins said on CNBC on Sept. 10 that the stock response to the regulatory dispute was not reflective of DraftKings’ opinion on prediction markets. He repeated that point at Front Office Sports’ Asset Class event last week, calling the situation a “disconnect.”
Why Wall Street sees the reaction as rational
Analysts and investors told CNBC the market response makes sense because DraftKings still gets its revenue primarily from sportsbook operations, not from prediction markets.
Joel Shulman told CNBC, “The markets are being completely rational,” adding that “Investors are responding to the current business [DraftKings] is in, not the one they’re moving into.”
That distinction is important for operators watching the space. DraftKings has repeatedly expressed interest in prediction markets, but analysts said its stock is still being priced mainly on the sportsbook business. CNBC reported the shares have fallen nearly 50% over the past year and more than 16% over the past month, underscoring how sensitive the company remains to broader operating performance.
Analysts also said DraftKings could remain exposed to headline-driven volatility until there is clearer guidance on which regulator controls prediction markets, potentially from the Supreme Court.
DKeX gives investors a possible upside story
DraftKings launched its proprietary prediction markets exchange, DKeX, in late June, giving investors a fresh way to evaluate whether the category can become a meaningful business line.
Bernstein analyst Ian Moore said investors have “fully discounted the risk from prediction markets in DraftKings’ stock price but have not discounted the opportunities.” He said DKeX ranked third last week in total share of prediction market volume, behind Polymarket and Kalshi.
Moore estimated consumer volume on DraftKings’ predictions platform could reach $1 billion by December, which he said would equal about 9% of the company’s current market capitalization. He told CNBC that the sustainability of DKeX “through the fall is going to be huge” and that “Around December, you’ll have a good idea of how sustainable that growth has been.”
Bernstein has an outperform rating on DraftKings and a $29 price target, implying 32% upside from Monday’s close. For now, the next key marker is whether DKeX can maintain volume through the fall while the legal fight over prediction market oversight continues.
Source: As reported by cnbc.com.
