On February 3, just days ahead of the Super Bowl, Cathie Wood’s exchange-traded funds (ETFs) sold off a significant portion of their DraftKings (DKNG) stock, totaling 785,490 shares. This development comes amid ongoing struggles for the online gambling company, which has faced increasing competition from emerging prediction markets. Although concerns regarding competitive pressures have been voiced, some experts argue that these fears may be overstated.
DraftKings, headquartered in Boston, operates retail sports betting in 28 states and offers a prediction market app in 38 states, allowing users to place online bets on casino games as well. With a market capitalization of $13.5 billion, DraftKings reported a 4% increase in revenue in the third quarter of the fiscal year, totaling $1.14 billion. Notably, while the company reported an operational loss of $272 million, this was an improvement compared to the $298.6 million loss from the same quarter of the previous year. Looking forward, DraftKings has projected an impressive EBITDA for 2025, expected to fall between $450 million and $550 million.
As of market close on February 9, DraftKings’ stock price had dropped by 21% since the beginning of 2026, while the S&P 500 Index had seen a 1.75% gain during that same period. This decline raises concerns not only for DraftKings but also for its competitor Flutter (FLUT), which has also experienced share price declines. Analysts have significantly downgraded Flutter’s anticipated adjusted earnings per share (EPS) for Q4, cutting estimates by 49% over the past three months.
The rise of prediction markets, particularly through platforms like Kalshi, has reshaped the landscape of sports betting. Since the establishment of Kalshi, which allows users to wager on sporting events, there has been a notable shift in how betting is conducted, especially following a shift in regulatory attitudes under the Trump administration. With a staggering $1.5 billion wagered on the Seattle Seahawks alone during the most recent Super Bowl, there remains substantial financial potential for major online sports betting platforms, despite the current upheaval in the market.
As the sports betting industry continues to evolve, it is clear that both challenges and opportunities abound. Companies that can adapt to the changing landscape may still find ways to thrive in a competitive marketplace.