Jefferies says DraftKings, Flutter reaction to Illinois news looks ‘overdone’

Jefferies analyst David Katz notes that a new, progressive online sports betting tax in Illinois “creates incremental uncertainty” for U.S. online gambling profitability and that investors “will rightly worry” that additional U.S. states will follow suit. However, the firm sees this risk as minimal at this point and views the Illinois proposal as “relatively state-specific.” The firm, which also sees scope for material mitigation over time, says that its “math and checks suggest the reaction is overdone.” Jefferies has Buy ratings on both DraftKings (DKNG) and Flutter Entertainment (FLUT).