The stock market has a “shoot first, ask later” attitude toward digital-gaming companies, opined J.P. Morgan analyst Daniel Politzer, pointing to the recent 18% plunge in DraftKings’ stock price and the 11% dive taken by Flutter Entertainment, earlier this week.
The stock declines were prompted by new product offerings from Kalshi, further encroaching upon online sports betting. Politzer’s views were conveyed in a 2 October investor note.
Politzer allowed that digital-gaming stocks were oversold, but said regulatory clarification of what is and is not sports betting would be needed before they can be re-rated.
“There’s also not a clear timeline on when we will get regulatory clarity/comfort, which could result in either an end to prediction markets being widely offered on sports, or greenlight them and embolden DraftKings and peers to enter the market and deploy a (likely) superior product,” he wrote.
