Bank of America Lifts DraftKings to Buy on Prediction Market Projections

Bank of America upgraded its rating on DraftKings from Neutral to Buy. The revision sent shares up about 5%. Analyst Julie Hoover held a $27 price target.

The call comes after DraftKings acquired Railbird Technologies Inc. and subsidiary Railbird Exchange one year ago in October. The stock fell about 47% in that interval.

Prediction Market Revenue Projections

Hoover anchored the upgrade in DraftKings prediction market outlook. The bank sees around $40 million in fees for 2027 if the line holds. An additional $200-$400 million could arise from market-making.

Adoption metrics have climbed. More than 600,000 customers used the platform by August. Annualized trading volume rose from $2.3 billion in April to $11 billion in July, split between $3.6 billion consumer and $7.4 billion market-making.

Forecast Adjustments and Operating Risks

Bank of America cut its 2026 EBITDA estimate from $635 million to $500 million on higher build costs. It raised the 2027 figure from $1.05 billion to $1.15 billion to reflect expected sportsbook strength and market-making gains.

Prediction markets face distinct regulatory scrutiny and criticism from some state officials who view sports event contracts as akin to betting. DraftKings separately faces a Massachusetts lawsuit over artificial intelligence use in promotions. As reported by Gambling News, these elements shape the current investment case.

The rating revision underscores the tension between near-term expense and longer-term revenue diversification for operators already scaled in customer acquisition and trading systems.

Reporting: GamblingNews

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