DraftKings (NASDAQ: DKNG) investors received disappointing news about new state taxes on gaming revenue, which could hurt the company’s profits.
Illinois recently passed a budget that adds a tax on every sports bet made in the state. The tax charges 25 cents per bet for the first 20 million wagers and 50 cents for bets beyond that. Analysts estimate this could have cost DraftKings about $68 million in extra taxes over the past year. This news caused DraftKings shares to drop sharply, falling 6-7% in early June trading.
Despite this setback, Bernstein analysts started coverage of DraftKings with an “Outperform” rating and set a price target of $46. They praised DraftKings’ strong position in online sports betting and iGaming, noting its improved live pricing after acquiring SimpleBet. The firm also highlighted growth in monthly unique payers, which rose 28% to 4.3 million in Q1 2025 compared to a year earlier.
DraftKings also benefits from cross-selling opportunities with Jackpocket, which it recently acquired. These factors support the company’s potential for sustained profit growth.
However, some analysts caution that other sectors, like AI stocks, may offer higher returns with less risk. Meanwhile, DraftKings’ stock has faced pressure from rising competition and recent tax changes, causing it to trade about 37% below its 52-week high.
Investors should watch key price levels near $29 and $23 for potential support, while resistance may appear near $39 and $47 as the stock tries to recover.
