Morgan Stanley says buy DraftKings, Flutter on prediction markets expansion

Morgan Stanley analyst Stephen Grambling says the firm’s New credit card data analysis of about 9M users comparing online sports betting with prediction markets shows little overlap between Kalshi and the betting duo of DraftKings (DKNG) and Flutter Entertainment (FLUT), giving the firm more confidence that expansion into prediction markets will expand the total addressable market via new markets and demographics. The data also shows ongoing growth in existing markets via higher deposit frequency, countering the maturation narrative, adds the analyst, who sees room for upside revisions and rerating as the sports betting companies launch their own prediction market products, expand into market making and grow existing markets. The firm maintains Overweight ratings on both DraftKings and Flutter.