Shares of DraftKings Inc (NASDAQ:DKNG) are in the spotlight on Thursday after research firm The Bear Cave published a new report detailing a growing competitive threat from prediction markets. Here’s what investors need to know.
What To Know: The report, titled “More Problems at DraftKings,” is a follow-up to a warning issued two weeks ago in which the Bear Cave argued that DraftKings is likely to lose share to prediction market platforms.
The Bear Cave on Thursday stated that investors are underestimating the long-term threat from platforms like Kalshi, which it says offer better odds, more liquidity and do not restrict winning bettors.
Benzinga has reached out to DraftKings for comment on the report.
Since the report from two weeks ago, prediction markets have continued to gain traction and have now “gone mainstream,” according to the report.
“Volume on prediction markets has continued to explode and the imminent launch of Polymarket, another prediction market platform that plans to offer sports betting, will only accelerate the trend,” the research firm wrote in the report.
The Bear Cave report highlights Kalshi’s recent launch of parlays, the most profitable segment for sportsbooks. One cited example showed a bettor could win $1,043 on a Kalshi parlay compared to only $850 for the same bet on DraftKings.
The Bear Cave argued that prediction platforms will disrupt traditional sportsbooks. This trend is amplified by key distribution partnerships, such as Kalshi powering Robinhood Markets Inc’s (NASDAQ:HOOD) football event contracts. Robinhood recently announced its prediction markets had surpassed four billion in total volume.
Read Also: DraftKings Stock Sinks Despite Major NBCUniversal Sports Advertising Partnership
What’s Next For DKNG: For DraftKings, the report suggests a structural threat to its core business model. The rise of prediction markets, with potentially better odds and efficient distribution through partners like Robinhood, could erode the company’s market share and compress its high-margin parlay business.
This competitive pressure from what The Bear Cave calls a “better product” may force the company onto the defensive, challenging its long-term growth and profitability prospects.
Benzinga Edge Rankings: Benzinga Edge stock rankings give the company a Momentum score of 30.05 and a Growth score of 21.52.
DKNG Price Action: DraftKings shares were up 0.07% at $35.18 at the time of publication on Thursday, according to Benzinga Pro.
How To Buy DKNG Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in DraftKings’ case, it is in the Consumer Discretionary sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
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