Bank of America Lowers Ratings on Gambling Stocks Due to Risks Posed by Prediction Markets
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 04 2025
0mins
Source: CNBC
Bank of America Downgrade: Bank of America downgraded DraftKings and Flutter Entertainment, citing increased competition from prediction markets and regulatory uncertainties, lowering their ratings from buy to hold and cutting price targets significantly.
Market Dynamics: The analysts noted that the entry of new players like Polymarket and Kalshi, which have low barriers to entry and zero fees, could lead to increased competition and a potential "race to the bottom" in fees and marketing efforts.
Regulatory Challenges: The online sports betting industry faces a complex legal landscape, with at least five states warning operators about potential consequences for entering prediction markets, complicating the operational environment for incumbents.
Future Outlook: Analysts predict that the legal issues surrounding online sports betting may not be resolved until mid-2026, which could further disadvantage established operators against new entrants.
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Analyst Views on FLUT
Wall Street analysts forecast FLUT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for FLUT is 296.77 USD with a low forecast of 228.00 USD and a high forecast of 381.46 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
26 Analyst Rating
23 Buy
3 Hold
0 Sell
Strong Buy
Current: 166.730
Low
228.00
Averages
296.77
High
381.46
Current: 166.730
Low
228.00
Averages
296.77
High
381.46
About FLUT
Flutter Entertainment plc is an online sports betting and iGaming operator. Its segments include the United States (U.S.), United Kingdom and Ireland (UKI), Australia and International. The U.S. segment offers sports betting, casino, DFS and horse racing wagering products to players across various states in the United States, mainly online but with sports betting services also provided through retail outlets and certain online products in the province of Ontario in Canada. The UKI segment offers sports betting (sportsbook), iGaming products and other products through its Sky Betting & Gaming, Paddy Power, Betfair and tombola brands. Its Australia segment offers online sports betting products through its Sportsbet brand. The International segment includes its operations in 100 global markets and offers sports betting, casino, poker, rummy and lottery, mainly online. This segment includes Sisal, PokerStars, Snai, Betfair International, Adjarabet, MaxBet, Betnacional, and other brands.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
CFTC Announces New Rules for Prediction Markets
- Major Policy Shift: CFTC Chairman Michael S. Selig announced the drafting of 'clear rules' and the withdrawal of proposals prohibiting sports and political contracts, aiming to eliminate market uncertainty and support lawful innovation.
- Clarification of Rules: Selig noted that the existing framework has proven difficult to apply, and the CFTC will establish 'clear standards' to improve the management of event contracts, ensuring the legal rights of market participants.
- Legal Scrutiny Context: Amid increased legal scrutiny from state regulators on prediction markets, Coinbase has filed lawsuits against Michigan, Illinois, and Connecticut, seeking to confirm the CFTC as the sole regulator of these markets.
- Market Reaction Mixed: Despite the potential positive impact of the CFTC's new rules, stocks of sports-related companies like Genius Sports did not rally, while shares of DraftKings and Flutter Entertainment showed mixed signals, indicating cautious market sentiment.
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Competition Between Sports Betting and Prediction Markets
- Market Dynamics: Roundhill Investments CEO Dave Mazza highlights that sports betting companies like DraftKings and Flutter are launching prediction-style products to adapt to market changes, indicating industry evolution rather than displacement.
- Regulatory Impact: The regulation of prediction markets has become a key battleground, with some states attempting to restrict Kalshi and Polymarket's operations while legal online sportsbooks continue to operate, showcasing market complexity.
- Profitability Focus: Mazza notes that 2026 is expected to be a consolidation year, with operators focusing on profitability and states interested in tax revenue, likely leading to more partnership reshuffling and selective M&A.
- Market Outlook: Despite DraftKings and Flutter stocks dropping 26% and 34% over the past 52 weeks, respectively, Mazza believes that innovative disruption indicates the long-term potential of the sports betting and gambling markets, with future regulation being a key factor.
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