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Bank of America Lowers DraftKings, Flutter Q2 Estimates Ahead of Earnings
Summary
Bank of America has reduced its second-quarter earnings forecasts for DraftKings and Flutter Entertainment, citing unfavorable sports betting outcomes and rising investment in prediction markets.
Bank of America has lowered its second-quarter earnings estimates for online gaming giants DraftKings (NASDAQ:DKNG) and Flutter Entertainment ahead of their reports in early August. The firm pointed to unfavorable sports betting results and higher-than-anticipated investment in emerging sectors as key reasons for the downward revisions.
Flutter is scheduled to report its earnings on August 5, with DraftKings following on August 6.
BofA Trims Q2 Estimates
In a note to clients, Bank of America detailed its revised expectations for the second quarter, bringing its forecasts below consensus for both companies.
- DraftKings: The firm's Q2 EBITDA estimate was lowered to $120 million, significantly below the Wall Street consensus of $173 million.
- Flutter (FanDuel): The Q2 EBITDA estimate for its FanDuel division was reduced to $110 million, slightly under the consensus estimate of $113 million.
Unfavorable Hold and New Investments Cited
The primary drivers for the estimate cuts include a weaker-than-expected "hold," or the percentage of customer wagers kept as revenue, during the second quarter. This indicates that betting outcomes were more favorable to customers than to the operators.
AdFor DraftKings, BofA also noted that investment in the burgeoning prediction market space is likely to be slightly higher than the company's guidance of approximately $250 million. The bank also reduced its full-year 2026 EBITDA estimate for DraftKings to $625 million from a previous $700 million.
The Rise of Prediction Markets
Bank of America highlighted the rapid growth of prediction markets as a notable trend impacting the sector. Total volume in these markets reportedly surpassed $40 billion in June, compared to an online sports betting handle of approximately $12 billion.
The firm also observed increasing user crossover between platforms. The percentage of DraftKings users who also used the prediction market Kalshi rose to 9.5% in June, up from just 4% in January, according to the note.
Outlook and Ratings
Despite the near-term estimate reductions, Bank of America maintained its Neutral rating on both DraftKings and Flutter Entertainment. The firm's 2026 EBITDA estimate for FanDuel of $634 million remains substantially below the midpoint of Flutter's own guidance, which stands at $970 million.
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