Bank of America on Tuesday downgraded gambling stocks DraftKings and FanDuel owner Flutter Entertainment , warning that online sports betting faces a rocky road ahead as competition from prediction markets grows and regulatory uncertainty mounts. BofA cut its rating for DraftKings and Flutter from buy to hold and slashed its price targets for the stocks by 23% and 27%, respectively. The bank now has a price of $250 per share for Flutter, suggesting 8% upside from Monday’s close. It sees DraftKings hitting $35 per share, indicating about a 14% gain from current levels. Polymarket is poised to return to the U.S. as soon as late November with a focus on sports betting, people familiar with the matter told Bloomberg News late last month. Low barriers to entry and large fundraising valuations for Polymarket and Kalshi will likely attract many new entrants, BofA analysts led by Shaun Kelly told clients. “Strategically, it seems like a race to the bottom of fees and meaningful increase in marketing is possible in coming months, as we note that Polymarket internationally has zero fees,” Kelly and his colleagues wrote. Meanwhile, online sports betting faces a complicated legal landscape that is unlikely to find a resolution until the middle of 2026, the analysts wrote. At least five states have warned online sports betting and gaming operators of consequences if they enter prediction markets, according to BofA. “While Federal and State cases work through the courts, state regulators including NV, IL, OH, MI, and AZ are seemingly boxing-in the incumbent operators, handing an advantage to disruptors and new entrants,” the analysts wrote.
