CNBC’s Jim Kramer on Friday explained why he thinks he’s getting the chance to buy it DraftKings Following recent losses in stocks, it said competition from the online forecast market is not a major threat to the business.
“I’m not leaving this stock. I think the horror of the forecast market is exaggerated here, so if you don’t own Draft King yet, I’m telling you, you have my blessing to put a small position here,” he said. “Beyond that, let’s pause our judgment until they report it at the end of the month.”
Draftkings reported a solid quarter in August, but its stock has retreated more than 20% from its September high. Cramer proposed that Draftkings and its sports betting peers face challenges from the online forecast market, namely Polymarket and Kalshi. These platforms allow users to bet on each other on a wide range of events, ranging from sports to political achievements to the name of the Times Person of the Year.
According to Cramer, the lack of forecast market regulation is the most important advantage. Traditional sportsbooks like Draftkings are heavily regulated by the states in which they operate, but the forecast market is treated like a stock exchange, Cramer said. The forecast market doesn’t require you to navigate state-by-state licenses, as business is not perceived as gambling. Cramer said people there are allowed to wager on sports through forecast markets while Draftkings fights for licenses in several densely packed nations.
However, Cramer said he believes Draftkings sellers may be overreacting to the threats of the forecast market. The forecast market offering is “pretty bare bones” compared to DraftKings’ products, he said. Cramer also suggested that it is not clear whether the forecast market is actually taking market share from DraftKings as it is doing business in states where sports betting is still illegal. He referenced an analyst’s note from Jeffries. Jeffries said a significant portion of Calci’s business comes from Texas and California.
Kramer also cited a report from Oppenheimer, who said that 40-50% of the volume of calci comes from. Robin Hoodwhich indicates that much of the user base is new to sports betting. Analysts at Oppenheimer suggested that the forecast market could in fact be a tailwind for future sportsbooks. This is because sports betting, which eventually moves to platforms like Draftkings, can attract more users. They have developed this dynamic after ESPNBET was launched, and consumers have become more established names, DraftKings, and Fluffy”s fanduel.
The forecast market is currently facing legal challenges, Cramer said some are involved in lawsuits from some states. He suggested that these platforms could be subject to stricter regulations in the future.
“I don’t want to speculate on the outcome here, but before I panic and sell Draft King here, I need to be aware of the flimsy legality of the forecast market situation,” he said. “After all, there’s a reason online sportsbooks aren’t appearing in the forecast market. Perhaps we’re worried that when regulators finally come down on these platforms, they’ll be off violently.”
DraftKings declined to comment.
