DraftKings (DKNG) Stock Soars 4% in 2025 Following Canada's Sports Betting Legalization
DraftKings shares surged after Canada’s decision to legalize single-event sports betting, unlocking billions in potential revenue from previously illegal markets.
Canada is poised to legalize single-event sports betting, marking a significant shift in the gaming industry landscape.
Shares of DraftKings Inc. (DKNG) climbed over 4% on Friday after Canada’s Department of Justice announced plans to decriminalize single-event sports betting nationwide. This move is expected to redirect billions of Canadian dollars currently wagered through illegal bookmakers and offshore websites into regulated markets.
Highlights
- DraftKings stock jumped more than 4% following Canada's legalization of single-event sports betting.
- Analysts hold mixed views: UBS rates DKNG as Neutral with a $52 price target, while Piper Sandler assigns an Overweight rating and a $58 price target.
- Although approaching overbought territory, the stock’s medium- and long-term trends remain bullish.
The new legislation will allow provinces to license operators to accept bets on all sporting events except horse racing, which will remain under a separate regulatory framework. Currently, Canadians wager approximately C$14 billion annually on single-event bets through illegal channels.
UBS recently initiated coverage on DraftKings with a Neutral rating and a $52 price target. Analyst Eric Sheridan acknowledges the company’s growth potential but advises caution due to current market valuations.
Conversely, Piper Sandler’s analyst Yung Kim issued an Overweight rating with a $58 price target, highlighting DraftKings’ strong brand built over eight years as a competitive advantage in the emerging sports betting market.
Investment Insight
The risk/reward ratio helps investors evaluate potential returns relative to the risks taken. This metric is essential for comparing investment opportunities and making informed decisions.
Technically, DraftKings extended its rally from the 50-day moving average at $47.27 during Friday’s trading. The Relative Strength Index (RSI) neared overbought levels at 67.97, while the Moving Average Convergence Divergence (MACD) remained bullish since early June. These indicators suggest a possible short-term consolidation before further upward momentum.
Investors should monitor price action near the recent highs and Fibonacci support at $49.50. A breakout could propel the stock toward retesting previous highs near $65. Conversely, a decline below the 50-day moving average might lead to a retest of trendline support around $37.50, though this outcome appears less probable.
Conclusion
DraftKings shares gained over 4% following Canada's move to legalize single-event sports betting, potentially unlocking a multi-billion-dollar revenue stream from previously untapped markets. While some short-term consolidation may occur, the long-term outlook remains optimistic with the potential to revisit highs near $65.
The author does not hold positions in the mentioned stocks, except through passively managed index funds.
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