DraftKings and Flutter Jump as World Cup Continues, But Key Risk Remains

Top sports betting stocks have rebounded in recent weeks, supported by the NBA Finals and the FIFA World Cup.

DraftKings and Flutter Entertainment Stocks Rise During World Cup

DraftKings (NASDAQ:DKNG) stock jumped to $29, up by 42% from its lowest point this year. Similarly, Flutter Entertainment (NYSE:FLUT), the parent company of Fanduel, Betfair, Sisal, and Paddy Power, rose to $110 from the year-to-date low of $91.

These companies are doing well as analysts predict that sports betting on the FIFA World Cup will be the highest on record. A recent report by Eilers & Krejcik Gaming predicted that Americans will wager $4.4 billion during the tournament. In contrast, Americans wagered $1.8 billion in the last World Cup in 2022.

These numbers are bullish for DraftKings and Flutter Entertainment, which are the top leaders in the United States. It comes at a time when their revenue growth has slowed dramatically in the past few months.

Indeed, while their stocks have rebounded recently, they remain much lower than their all-time highs. Draftkings stock has plunged by 45% from its highest point in February last year, with its valuation dipping from $26 billion to $14 billion. Flutter has also slipped by 65% from its last year's highest point. 

Prediction Marketplaces Pose a Major Risk

Sports betting companies are facing a major risk: prediction markets. Data shows that platforms like Polymarket and Kalshi are gaining market share in the industry. 

For example, a Polymarket poll on the winner of the World Cup has attracted wagers worth over $2 billion. A similar poll on Kalshi has over $230 million in assets, a figure that continues rising. These metrics are important as the prediction markets were not popular during the last World Cup in 2022. 

As a result, there is a likelihood that sports betting platforms' market share will thin over time. One reason for this is that companies like Polymarket and Kalshi offer many assets to trade. Firms like Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD) have also partnered with Kalshi to offer these predictions. In a recent statement, DraftKings said that its predictions platform's usage was growing.

As a result, despite the World Cup boost, analysts believe that their revenue growth will be muted this year. Benzinga data shows that the average estimate for DraftKing's revenue for this year is $6.8 billion, up by 12% YoY. Flutter is expected to make $18.3 billion, up by 12% YoY.

DraftKings and Flutter are also expected to narrow their profits as they boost their marketing spend. Flutter's earnings-per-share is expected to drop from $7.94 in 2025 to $5.76 this year. 

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