Bank of America upgraded DraftKings from Neutral to Buy, kept its $27 price target and estimated the company could collect about $400 million in prediction-market fees in 2027.
The forecast gives investors a concrete measure of the potential contribution from a business DraftKings is expanding alongside its sportsbook. BofA also sees a separate $200 million to $400 million opportunity from market-making activities; it did not combine that estimate with the fee forecast.
Different forecasts for 2026 and 2027
BofA said DraftKings had become the third-largest player in prediction markets and that concerns about the products taking business from its sportsbook had eased. The bank pointed to traditional sportsbooks growing faster than prediction markets since football season began.
The upgrade comes with a near-term earnings cost in the bank’s estimates. BofA cut its 2026 adjusted EBITDA forecast to $500 million from $625 million, citing increased prediction-market investment, partly offset by stronger performance in DraftKings’ core business.
For 2027, BofA raised its adjusted EBITDA estimate to $1.15 billion from $1.05 billion, reflecting stronger core trends and expected market-making contributions. It said DraftKings could guide to a range of $1.0 billion to $1.2 billion, leaving room to keep investing while taking a conservative view of prediction markets.
Regulatory uncertainty remains part of the calculation
DraftKings shares had fallen 47% over the prior year, which BofA said made the risk-reward more attractive. Its $27 target implies about 45% potential upside and is based on 12 times 2027 enterprise value to adjusted EBITDA, a modest discount to other leading disruptors.
The bank’s case does not depend only on prediction markets continuing to expand. BofA said DraftKings could also benefit if the products were ultimately restricted, because that outcome would remove regulatory uncertainty that weighs on the company’s valuation.
That balance between growth potential and exposure to changing rules is central to DraftKings’ prediction-market strategy. The opportunity is also arriving as the company manages broader operating pressures, including those covered in its second-quarter financial results.
Fees are not the same as durable profit
BofA’s estimate is a forecast, not revenue DraftKings has already generated. Whether the potential fees and market-making activity translate into lasting earnings will depend on execution, continued demand and the regulatory outlook, which has also drawn tribal opposition to the expansion.
The bank said stronger cost discipline would be needed to support higher margins beyond 2027. That makes the $400 million projection a test not just of whether DraftKings can attract prediction-market activity, but of whether it can turn that activity into profitable growth without weakening its core sportsbook.
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