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Is DraftKings Stock A Buy After Illinois Gambling Tax Hike? – DraftKings (NASDAQ:DKNG)

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DraftKings Inc DKNG shares are trading lower after the Illinois State Senate approved a 2025 budget that includes a significant sports betting tax hike.

The new legislation will more than double the current tax rate, increasing it from around 15% to the mid-to-high 30% range. This change is expected to take effect in July, pending approval by the House. The tax hike follows similar measures in other states, such as Ohio and New York, driven by the explosive growth of the sports betting industry and the need for increased problem-gambling services.

Related: DraftKings Stock Is Sliding Tuesday: What’s Going On?

DraftKings Stock Gambling With The Bears

DraftKings’ stock performance shows a mixed picture: a 55.69% gain over the past year but only a modest 2.87% increase year-to-date.

Chart: Benzinga Pro

However, the stock is currently experiencing selling pressure. The share price of $36.28 is below its five-day, 20-day and 50-day exponential moving averages, indicating a bearish trend. This reinforces the bearish sentiment. The 200-day SMA at $36.91 is also slightly above the current price, suggesting continued downward pressure.

The Moving Average Convergence Divergence (MACD) indicator is at -1.16, pointing to bearish sentiments, while the Relative Strength Index (RSI) of 29.95 indicates the stock is oversold.

Overall, the technical momentum is more bearish for DraftKings stock.

Analysts Remain Bullish On DraftKings – See 56.49% Upside

Despite the technical bearish signals, analysts maintain a bullish outlook with a consensus Buy rating and a consensus price target of $49.21. Recent ratings from Stifel, Oppenheimer and Needham set an average price target of $56.67, implying a potential upside of 56.49%.

DraftKings faces immediate pressure from the new tax hikes, but the overall bullish analyst sentiment suggests potential for future growth. Investors should weigh the immediate bearish technical signals against the longer-term positive outlook from analysts.

Investors should monitor the impact of this legislative change on the company’s financials.

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