Here’s Why DraftKings Stock (DKNG) Is Getting Hammered Today

The sports betting industry in Illinois was hit with a surprise over the weekend when Governor J.B. Pritzker signed a new state budget that included an unexpected tax. This tax applies to every online sports bet placed in the state and comes on top of the current progressive tax system. According to the new rules, sportsbooks will now have to pay $0.25 for each of the first 20,000 online bets they accept each year, and $0.50 per bet after that point.

Four-star Truist analyst Barry Jonas pointed out that the new tax will affect major players like DraftKings (DKNG) and Flutter Entertainment (FLUT) the most, since they handle the largest volume of bets in the state. BetMGM (MGM), which had the third-highest number of bets placed in Illinois over the past year, is also expected to feel the impact, though to a lesser extent. As a result, all three stocks were down at the time of writing, with DKNG stock getting hit the hardest.

Separately, four-star Jefferies analyst David Katz mentioned that this new tax could push some bettors toward alternatives like prediction market operators such as Kalshi. However, he added that platforms like Kalshi currently lack the parlay bet options that make companies like DraftKings and FanDuel so appealing to many sports gamblers. Therefore, while some bettors might look into other platforms, traditional sportsbooks are still likely to hold an edge.

Which Sports Betting Stock Is the Better Buy?

Turning to Wall Street, out of the stocks mentioned above, analysts think that DKNG stock has the most room to run. In fact, DKNG’s average price target of $55 per share implies more than 62% upside potential. On the other hand, analysts expect the least from FLUT stock, as its average price target of $313.40 equates to a gain of 26.7%.

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