What Happened?

Shares of fantasy sports and betting company DraftKings (NASDAQ: DKNG) fell 1.9% in the afternoon session after reports revealed Crypto.com and Underdog Sports are partnering to launch sports prediction markets in the U.S., signaling increased competition in the sector. The news sent shares of other European betting and gambling companies, including Entain and Evolution, lower as well. According to a CNBC report, the new platform from Crypto.com and Underdog Sports will initially target 16 states where sports betting is not yet legalized. The partnership highlights a growing crossover between financial trading and sports betting through prediction markets, where users trade contracts based on the outcome of sporting events. This development could heighten competitive pressure in an industry already navigating rapid digitalization and regulatory shifts, with other firms like Robinhood and Kalshi also entering the space.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy DraftKings? Access our full analysis report here, it’s free.

What Is The Market Telling Us

DraftKings’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 14 days ago when the stock dropped 3.7% on the news that investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week. The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.

DraftKings is up 29.7% since the beginning of the year, but at $47.06 per share, it is still trading 12% below its 52-week high of $53.49 from February 2025. Investors who bought $1,000 worth of DraftKings’s shares 5 years ago would now be looking at an investment worth $1,180.

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