Spruce Point short DraftKings, sees 35%-60% potential long-term downside

The short-seller expresses “serious concerns regarding the impact to DraftKings (DKNG) sportsbook market share given the significant volume, or handle, being generated by emerging prediction markets for sports betting such as Kalshi and Polymarket, noting that despite the recent share price movement and other prescient short-seller critiques, there is still significantly more downside risk because investors and sell-side analysts are not fully understanding the gravity of the situation and long-term disruptive impact on the Company’s business… Kalshi and other sports prediction markets will continue to operate while state litigation drags on. The U.S. Supreme Court will have to ultimately decide on their legality which may not happen until summer 2027. Kalshi also appears to offer better odds than DraftKings which is driving Kalshi’s rapid handle growth and potential market share capture.”