DraftKings (NASDAQ:DKNG) ended six straight sessions of gains on Wednesday as its shares closed 0.16% lower at $42.74.
The company added more than 13% in the preceding six sessions. On a year-to-date basis, the gaming company’s shares have gone up by more than 15% compared to a nearly 4% rise in the S&P500 index.
As per Seeking Alpha’s quant rating, DKNG has a Hold rating with a score of 2.89 out of 5. The company has been rated A- for growth but has scored a D- for valuation. Seeking Alpha analysts also share a consensus rating of Hold for the stock.
However, Wall Street analysts have a starkly different opinion on the company and have issued a Strong Buy call for it. A total of 28 analysts have rated the stock Buy and above, five recommend to Hold the stock while it has no Sell call.
Earlier this month, Illinois introduced a new tax in its budget that would apply to all online sports wagers placed in the state, adding to the state’s existing progressive tax system. Under the new rule, sportsbooks operating would be charged $0.25 for each of the first 20,000 online bets they accept annually and $0.50 for every bet placed beyond that limit.
Following this New Jersey has also raised taxes levied on online gaming revenue would increase to 20% from 15%.
To offset the costs related to the increased regulations, DraftKings and its competitor Flutter Entertainment (FLUT) now charge online gamers in Illinois a 50-cent transaction fee on all online bets.
Seeking Alpha analyst Howard Jay Klein rated DraftKings as Hold calling it overvalued at $40. Commenting on DKNG’s decision to pass its costs onto consumers, he noted that the policy carries inherent downside risk.
“The move was made by management in the Illinois market in reaction to state fee hikes. This shows that the platforms challenged by state tax hikes will not go unanswered when levied. The 50-cent fee hike comes off the state’s take. It sounds like chump change, which in a sense it is. But this could be the little incident that sparks a longer-term battle over rising gaming taxes, good for no one,” Klein said.