Posted on: May 14, 2026, 06:01h.
Last updated on: May 14, 2026, 06:01h.
DraftKings (NASDAQ: DKNG) eked out a small gain today despite an analyst initiating coverage of the sports betting stock with his firm’s equivalent of a “sell” rating.
BNP Paribas is the only research firm with a “sell” rating on DraftKings. (Image: DraftKings/Shutterstock)In new coverage of DraftKings, BNP Paribas analyst Charlie Muir-Sands grades shares of the sportsbook operator “underperform” — the French bank’s equivalent of “sell” — citing the “dramatic threat” posed by prediction market rivals Kalshi and Polymarket.
The aggressive expansion of federally regulated prediction markets looks set significantly dampen DraftKings’ growth and moderate margin expansion,” notes Muir-Sands.
It’s not unheard for sell-side analysts to apply “sell” ratings to DraftKings, but it’s not par for the course, either. Entering today, 33 analysts covered the stock, with 27 rating the equivalents of “strong buy” or “buy”, according to Seeking Alpha data. That is to say, Muir-Sands is currently the only analyst rating DraftKings “sell.”
DraftKings Has an Overlap Problem, Says BNP Paribas
BNP Paribas has a $20 price target on DraftKings, implying potential downside of more than 20% from today’s close at $25.15. Part of the problem according to Muir-Sands is the specter of cannibalization risk at the hands of Kalshi and Polymarket.
The French bank recently conducted a survey of sports bettors and prediction market users, discovering that more than 50% of Kalshi and Polymarket traders also wager on DraftKings. That “significant overlap” could make DraftKings vulnerable to lost market share.
However, other sell-side surveys have indicated Kalshi trails DraftKings in terms of favorability among customers. Those studies also suggest that in states where bettors have access to both DraftKings sportsbook and prediction markets, they frequently choose the former over the latter.
Muir-Sands says a shift in user behavior is afoot, one that favors the event-based nature of sports event contracts over standard sports betting and that could adversely affect incumbent sportsbook operators such as DraftKings. Still, DraftKings has its own prediction market — DraftKings Predictions — and it’s showing signs of strength, including in market making and driving customer acquisition costs down.
Not All Bad News for DraftKings
While the “underperform” rating on DraftKings is unusual and may have caught some investors by surprise, Thursday’s sell-side news flow for the gaming stock wasn’t entirely negative.
In a report out earlier today, Morgan Stanley forecast second- and third-quarter handle growth of 6% and 8%, respectively, citing a better-than-expected showing in April and the World Cup, which starts in June.
Morgan Stanley mentioned prediction markets, noting investments in DraftKings Predictions could weigh on the operator’s 2026 financials while potentially acting as catalysts for longer-ranging growth. The bank rates the stock “overweight” with a $39 price target, down from $40.
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