BofA upgrades DraftKings to Buy, says prediction markets are $400M opportunity not threat
Bank of America upgraded DraftKings stock to Buy on October 5, sending shares up 5%. The bank views prediction markets as opportunity rather than threat, estimating the segment could generate roughly $400 million in fees if it gains regulatory approval and remains viable. Analysts argue early fears that prediction markets would cannibalize the core sportsbook have not materialized. The note addresses investor concerns that intensified during the 2026 FIFA World Cup. DraftKings continues building its prediction market product alongside its sportsbook.
DraftKings stock had traded at multiyear lows on fears that Kalshi's 76% NFL volume lead would force a billion-dollar spending race. BofA's Buy call changes the Wall Street calculus: it validates Robins' argument that prediction markets are a 'complete myth' as a rival, not a replacement.
The $400 million fee estimate gives investors a concrete revenue line to model instead of a margin-burning arms race. That reframing matters most for the next earnings call, where executives must show DKeX volume growing faster than spending. If BofA's thesis spreads, DraftKings escapes the narrative that every Kalshi win is a DraftKings loss.
The upgrade caps a two-week stretch in which DraftKings traded at multiyear lows on Kalshi volume fears, then saw FanDuel make markets for Kalshi in a defensive liquidity play while DKeX held just 3% NFL share.