College prop ban would have ‘de minimus’ impact on DraftKings, says BofA

BofA analyst Shaun Kelley notes that shares of online gaming stocks fell by about 6% yesterday following headlines on college player prop bets and potential Federal oversight of problem gaming as well as a proposal for higher online taxes in New Jersey. While the college prop ban suggested by the head of the NCAA “gathered much attention from investors,” the firm believes higher online tax rates pose a larger threat to the nascent industry, the analyst tells investors. However, while headlines may persist, the firm thinks the underlying impact of a college prop ban is “de minimus” for DraftKings and a change in tax rates would take both legislative action and time to implement. The firm maintains a Buy rating and $54 price target on DraftKings shares.