BofA Upgrades DraftKings to Buy on Prediction Market Potential
United States.- 9 October 2026 | www.zonadeazar.com Bank of America has upgraded DraftKings from Neutral to Buy, helping lift the company’s shares by around 5%.
The bank maintained a $27 price target and said the growth of prediction markets could become a meaningful new revenue source for DraftKings during 2027.
Buy Rating
Analyst Julie Hoover upgraded the stock after concluding that DraftKings’ risk-reward profile has become more attractive.
The recommendation follows a period of significant pressure on the company’s share price.
Shares Had Been Under Pressure
DraftKings had lost roughly 47% of its value over the previous 12 months.
Bank of America’s upgrade triggered an immediate positive market reaction, with the stock rising by approximately 5%.
$27 Price Target
BofA kept its $27 price target unchanged.
The bank believes DraftKings’ current valuation does not fully reflect the potential contribution of prediction markets next year.
Prediction Markets as a New Growth Driver
A major factor behind the upgrade is the expansion of DraftKings Predictions.
The company entered the sector after acquiring Railbird Technologies and its subsidiary Railbird Exchange.
The strategy gives DraftKings exposure to event contracts operating under a different framework from traditional state-licensed sportsbooks.
More Than 600,000 Customers
DraftKings reported that more than 600,000 customers had used DraftKings Predictions by August.
The figure was disclosed in the company’s second-quarter investor communication.
Trading Volume Growth
Trading activity has also accelerated sharply.
Annualised volume increased from approximately $2.3 billion in April to $11 billion in July.
Of that total:
- $3.6 billion came from consumer trading.
- $7.4 billion came from market-making activity.
$40 Million in Fees
Bank of America estimates DraftKings could generate around $40 million in prediction-market fees during 2027, assuming the business remains viable.
Up to $400 Million From Market-Making
The larger opportunity could come from market-making.
BofA estimates that this activity could contribute an additional $200 million to $400 million.
That potential forms a major part of the bank’s more optimistic view of DraftKings’ 2027 financial outlook.
Lower 2026 EBITDA Forecast
Building the prediction-market business is also increasing costs.
Bank of America lowered its 2026 EBITDA estimate for DraftKings from $635 million to $500 million.
The reduction reflects higher spending required to develop and scale the new platform.
Stronger 2027 Outlook
The outlook improves significantly next year.
BofA raised its 2027 EBITDA forecast from $1.05 billion to $1.15 billion.
The revision reflects stronger expected sportsbook performance alongside potential prediction-market and market-making revenue.
Distribution Advantage
DraftKings already has a large customer base and a well-established US consumer brand.
That could provide a meaningful distribution advantage over newer entrants competing for prediction-market customers.
Regulatory Uncertainty
The financial opportunity comes with significant regulatory risk.
Several states argue that sports-related prediction contracts resemble sports betting and should be governed by state licensing requirements.
Prediction-market operators maintain that the products are federally regulated financial contracts overseen by the CFTC.
Next Steps or Impact
Bank of America’s upgrade reflects growing expectations that prediction markets could become an important new growth engine for DraftKings.
The platform’s performance during 2027 and the outcome of ongoing regulatory disputes will be central to determining whether the projected revenue and EBITDA gains materialise.
For now, investors reacted positively to the upgrade, sending DraftKings shares around 5% higher.
Editó: @fonta
