DraftKings Is Down 19% in a Month: Did Bank of America Just Call the Bottom?

A Bank of America (NYSE:BAC | BAC Price Prediction) analyst who kept the firm on the sidelines for a year has turned bullish, arguing that Wall Street estimates for DraftKings (NASDAQ:DKNG) are bottoming. That call arrives after a hard month for U.S. online sportsbook stocks. DraftKings stock is at $19.53 as the upgrade circulates through a beaten-down group.

Over the past month, DraftKings shares are down 19%, and that slide set up this bottom-calling debate. Meanwhile, shares of Flutter Entertainment (NYSE:FLUT), the owner of FanDuel and the most direct rival to DraftKings, are down 20% over the past month, a slightly deeper drop than the decline in DraftKings shares. Shares of MGM Resorts International (NYSE:MGM), the casino operator behind the BetMGM joint venture, are down 26% over the same stretch, the steepest slide among the three operators.

For sector-level context, the Roundhill Sports Betting & iGaming ETF (NYSEARCA:BETZ) is down 13% over the past month. In contrast, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 0.3% over the same period. Double-digit losses for all three operators against a broad market that barely moved point to a repricing of the entire category at once.

Bank of America Abandons the Sidelines on DraftKings

Bank of America analyst Shaun Kelley upgraded DraftKings stock to Buy from Neutral and kept the firm’s price target on the shares at $27. Kelley wrote that Bank of America had stayed on the sidelines for the past year because of a difficult event path from prediction markets and material risk to estimates. The new note reads prediction markets as a win-win outcome for DraftKings and flags reduced cannibalization risk for the company.

Two sources drove the slide in DraftKings stock. Kalshi and Polymarket are privately held platforms that let users trade contracts on event outcomes such as sports results, and there is uncertainty over how regulators may treat those platforms. As the operator of a proprietary prediction-market exchange, DraftKings has indicated continued spending on that product. For Q2 2026, DraftKings’ revenue came in at $1.44 billion, missing expectations.

Group Selloff Clouds the Bottom Call

MGM Resorts is primarily a casino operator, yet its shares fell harder than either online-focused rival over the past month, complicating any read that event-contract competition alone explains the slide. The Roundhill fund holds both DraftKings and Flutter among its largest positions, so the ETF’s decline partly mirrors those two stocks.

On the bull side, Kelley’s reversal stands out because Bank of America avoided DraftKings stock for a year over exactly this risk, and owning a prediction-market exchange gives DraftKings a direct way to compete for event-contract demand.

The upgrade leaves the competitive field untouched, skeptics say. Kalshi and Polymarket are still drawing event-contract volume that DraftKings must pay to win back, and those costs could keep pressure on margins even if Kelley turns out right about estimates.

What to Watch Next

The next quarterly results from DraftKings can test whether estimates have truly bottomed, and a fresh shortfall after the second-quarter revenue miss would weaken the bottoming argument, while a clean quarter would support the Bank of America reversal view.

Given how sharply the entire category has moved, investors should keep their exposure to DraftKings stock measured until the next results back up the upgrade. Building their DKNG share position in stages can limit the damage if event-contract competition continues to put pressure on the group.

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