Shares of DraftKings Inc. (DKNG) jumped over 13% yesterday and are up another 2% during the pre-market trading session after the Massachusetts legislature passed a bill to legalize retail and online sports betting on professional and collegiate sports.
Based in Massachusetts, U.S., DraftKings is a daily fantasy sports and digital sports entertainment company. The gaming company offers multi-channel sports betting, allowing players to win money based on individual player performances in major American sports events.
The new sports betting bill (H 5164) will legalize wagering on professional and certain collegiate contests.
However, betting on Massachusetts colleges and universities will not be allowed unless they are playing in a big tournament like March Madness.
There will be different tax rates applicable to different categories. Wagers in person will be taxed at 15%, while bets placed through the mobile platform will be taxed at 20%.
Wall Street’s Take on DKNG
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 13 Buys and six Holds. The average DraftKings price target of $26.56 implies 72.8% upside potential to current levels.
Hedge Funds Are Lapping Up DraftKings
TipRanks data indicates hedge funds have increased holdings in DraftKings by 2.2 million shares in the last quarter, indicating a very positive hedge fund confidence signal. Moreover, Catherine Wood’s ARK Investment Management has a holding in the company worth about $455.92 million.
Shares of DraftKings are down more than 65% over the past year. However, the stock price has seemed to bottom out and is ready for a reversal.
DraftKings will be a clear beneficiary of sports betting becoming legal in its home state of Massachusetts. Investors will learn more about the company’s plan to make the most of the legalization at its scheduled second-quarter earnings day on August 5.