DraftKings sinks 8.3% on prediction market regulation risk
Bipartisan Senate bill targeting CFTC-regulated event contracts and competition weigh on shares
DraftKings shares fell 8.3% on Wednesday to $21.38, as the sports-betting operator faces intensifying competition in prediction markets and growing regulatory scrutiny. The drop, which slashed the company’s market capitalization to about $11.9 billion, leaves the stock deeply oversold relative to technical levels. Its 14-day relative strength index is at 28.93, below the 50-day simple moving average of $26.68 and the 200-day SMA of $35.72. DraftKings is now trading near its 52-week low of $21.01, according to market data.
The decline coincides with bipartisan pressure in Washington. Senators Adam Schiff (D-Calif.) and John Curtis (R-Utah) introduced the “Prediction Markets Are Gambling Act,” legislation that would bar the Commodity Futures Trading Commission from permitting event contracts related to sports and casino-style events. The senators have signaled optimism about the bill’s support, and its passage would reshape the landscape for platforms such as Kalshi, Polymarket and DraftKings’ own prediction-market offering.
Representative Alexandria Ocasio-Cortez has publicly criticized the expansion of prediction markets, particularly their entry into sports. Describing Major League Baseball’s partnership with Polymarket as “sad,” she warned that “pervasive gambling is not good for society,” citing concerns about addiction, debt, domestic violence and manipulation. Her comments, and the broader political backlash, have added to the uncertainty for operators pushing into prediction markets.
DraftKings entered the prediction-market space in December 2025 with the launch of “DraftKings Predictions,” a standalone mobile app regulated by the CFTC. The move followed its acquisition of Railbird Technologies, a federally licensed exchange. CEO Jason Robins has framed prediction markets as a significant growth opportunity with potential for billions in revenue. The app is available in 38 states, though sports contracts are not offered in all jurisdictions. However, that growth bet now faces a more restrictive regulatory and political environment.
Competition is also rising. Kalshi, operating as a CFTC-regulated Designated Contract Market, expanded into sports contracts in early 2025 and has faced swift resistance from state regulators. Arizona filed criminal charges against Kalshi in March 2026, alleging it ran an illegal gambling enterprise, and Nevada issued a temporary restraining order barring sports, election and entertainment contracts. Meanwhile, Polymarket re-entered the U.S. market in late 2025 after acquiring a CFTC-regulated exchange and securing approval to operate as an intermediated contract market. Its March 2026 partnership with MLB has drawn sharp criticism from lawmakers.
The prediction-market industry is caught in a jurisdictional clash: the CFTC asserts exclusive federal oversight over “event contracts” as derivatives, while state regulators argue the platforms are engaging in unlicensed gambling. Conflicting court rulings and new federal legislation signal that the regulatory conflict is intensifying. DraftKings, with its recently launched prediction-market app, would be directly impacted if the Senate bill becomes law.
Market data shows DraftKings remains relatively highly valued by analysts, with an average target price of $36.17. Of 35 analysts tracked, 28 rate it a buy or strong buy and seven rate it a hold, with zero sell ratings. Despite the bullish analyst sentiment, the stock is sharply below its 52-week high of $48.78. The company’s trailing 12-month revenue is $6.05 billion, and shares trade at about 1.97 times sales. Institutional investors hold roughly 88% of outstanding shares.
Investors are weighing the long-term growth promise of prediction markets against near-term regulatory and competitive risks. The upcoming legislative path for the Schiff-Curtis bill and further state-level enforcement actions will be critical catalysts for DraftKings. As the sector faces heightened scrutiny, the market is reassessing how much regulatory risk is priced into shares that had previously reflected strong enthusiasm for sports betting and prediction-market expansion.