Shares of DraftKings Inc.(DKNG) experienced a significant decline on Wednesday following an announcement by NCAA President Charlie Baker, who expressed his intention to prohibit collegiate proposition betting. This form of wagering, which enables gamblers to place bets on events or statistical outcomes unrelated to the final result of a game, is widely popular.
The company’s stock declined 6.8% at the end of the trading day after reaching a low point of 8.8%.
This decline also affected other mobile sports betting companies, such as FanDuel parent Flutter Entertainment PLC and MGM Resorts International. Baker declared that the National Collegiate Athletic Association is collaborating with state legislators to eliminate college prop bets nationwide, asserting that the organization is taking a firm stance on sports betting to safeguard student-athletes and preserve the integrity of the game.
With sports betting on the rise, the NCAA is acting to protect student-athletes from harassment and working to protect the integrity of the game – this week shows why it’s so important to act. pic.twitter.com/krATwpS4hZ
— NCAA News (@NCAA_PR) March 27, 2024
Analysts from CWEB have indicated that the stock could face pressure and decline in value. According to analyst Bernie McTernan from Needham & Co, the prohibition of propositional betting in college sports is not anticipated to affect DraftKings’ financial performance significantly. McTernan states that these types of bets accounted for around 1.4% of the total money wagered in 2023.
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