DraftKings (DKNG) Stock Trades Down, Here Is Why

What Happened?

Shares of fantasy sports and betting company DraftKings (NASDAQ:DKNG) fell 11.2% in the afternoon session after reports of rising competition from prediction platforms Kalshi and Robinhood sparked investor concern. Kalshi, an emerging prediction market, shattered its trading records over the weekend, pulling in over $275 million on a Sunday fueled by football games. This significant activity signaled its growing influence in the sports betting sector.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy DraftKings? Access our full analysis report here, it’s free.

What Is The Market Telling Us

DraftKings’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for DraftKings and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 18 days ago when the stock dropped 3.6% as concerns grew over potential state-level regulations that could limit or ban popular proposition bets. These wagers, often called prop bets, focus on individual player statistics rather than the final outcome of a game. 

According to reports, critics argue these types of bets are easier for athletes to manipulate and can make players more susceptible to online harassment from gamblers. The scrutiny is increasing, with Ohio's governor reportedly calling for an outright ban on prop betting in professional sports. This potential regulatory headwind adds to existing restrictions, as at least 15 states already ban such betting for collegiate sports. The possibility of stricter rules or outright bans creates uncertainty for a key segment of the sports betting market.

DraftKings is up 3.6% since the beginning of the year, but at $37.60 per share, it is still trading 29.7% below its 52-week high of $53.49 from February 2025. Investors who bought $1,000 worth of DraftKings’s shares 5 years ago would now be looking at an investment worth $638.94.

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