Macquarie analyst Chad Beynon has identified DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT), the parent of FanDuel, as the best-positioned sports betting stocks for the 2025 football season.
Despite gains this year, both operators have trailed Rush Street Interactive (NYSE: RSI) and sports betting data firms. However, Beynon argues DraftKings and Flutter offer compelling near-term upside thanks to easier fourth-quarter comparisons following last year’s customer-friendly NFL outcomes, coupled with resilient Q3 hold and growth. He maintains “outperform” ratings on both names, with price targets implying mid- to high-teens upside.
Reduced Reliance on Pregame Bets
DraftKings and Flutter have steadily shifted away from traditional pregame wagers like sides and totals toward higher-margin products including player props, in-play betting, and same-game parlays.
“Given the strong growth in these segments, both companies are becoming less dependent on game results for hold rates. We think the risk/reward is skewed to the upside, particularly for DraftKings, which trades at a meaningful free cash flow yield discount,” Beynon wrote.
This focus on live and parlay betting also helps shield DraftKings and FanDuel from competition posed by prediction markets such as Kalshi, which lack the same in-game capabilities.
Margin Expansion in Sight
Even with anticipated losses from Missouri’s December 1 sports betting launch, Macquarie expects robust margin growth. Beynon forecasts that if DraftKings and Flutter hit a 10%+ hold rate, U.S. EBITDA margins could climb above 20% in 2025, with a long-term target of 30%.
Caesars Adds Illinois Betting Fee
Separately, Caesars Sportsbook will begin charging Illinois bettors a 25-cent fee per wager starting September 1, in response to the state’s recent sports betting tax hike. The charge will appear on bet slips and apply to all cash wagers, including profit-boost bets.
Caesars joins DraftKings, Fanatics, and FanDuel in rolling out similar per-bet fees in Illinois, while other operators have opted to raise minimum bet sizes.
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