The recent panic over prediction markets has knocked DraftKings Inc. (DKNG) and Flutter Entertainment PLC (FLUT) shares lower, but Macquarie analyst Chad Beynon thinks investors are missing the bigger picture. Instead of viewing prediction markets as an existential threat, he sees them as a $5 billion opportunity waiting to be captured.
The Bull Case Amid the Selloff
Beynon maintained his Outperform rating on DraftKings with a $48 price target and kept the same rating on Flutter with a $330 target. His thesis? The recent selloff is "unwarranted," and investors are getting a chance to buy two dominant online operators at a discount.
Here's the math that has Beynon excited: With FanDuel Predicts and DraftKings Predictions launching in the coming months, he estimates the total addressable market for prediction markets at $5 billion based on 40% of the U.S. population. That breaks down to $4.4 billion for sports prediction markets and $600 million for non-sports categories.
Why Prediction Markets Aren't the Enemy
"Our contention has been that prediction markets are not competitive with sportsbooks when it comes to live betting, player props and parlays," Beynon explained. In other words, these platforms serve different purposes and audiences rather than directly cannibalizing existing sports betting revenue.
The analyst projects that DraftKings and Flutter can capture market shares of 14% and 16%, respectively, in prediction markets for states that haven't legalized online sports betting. That's the key insight: prediction markets could open doors in jurisdictions where traditional sports betting remains off-limits, potentially boosting EBITDA for both companies rather than eroding it.
The Damage So Far
The numbers tell a brutal story. DraftKings has lost around $10 billion in market capitalization since late August, while Flutter has shed roughly $20 billion. On Monday, DraftKings stock closed down 1.83% at $29.44, bringing its year-to-date decline to 18.9%. The stock trades in a 52-week range of $26.23 to $53.61.
Flutter shares closed Monday down 0.79% at $191.79, now down 24.7% year-to-date in 2025. Its 52-week range spans $189.33 to $313.69.
Worst-Case Thinking
Beynon believes the market is pricing in a nightmare scenario: every state legalizes online sports betting while simultaneously blocking DraftKings and Flutter from launching prediction markets. "We maintain that the sell-off is overdone, and view now as an opportune time for investors to buy two best-in-class B2C Online operators at a discount," he wrote.
The optimistic take contrasts sharply with recent moves from BofA Securities, which downgraded both companies and lowered price targets, citing prediction markets as a major negative catalyst. Beynon's view suggests Wall Street may be overreacting to competitive threats while underestimating how these sports betting giants can adapt and capture new markets.
