DraftKings and Flutter Entertainment reeled Wednesday from several developments on the sports betting and online gambling scene. DraftKings stock dived after setting a new high.
Sports Betting, Online Gambling: Triple Whammy
With sports betting on the rise, the NCAA said Wednesday it wants to ban prop bets in college sports.
"The NCAA is drawing the line on sports betting to protect student athletes and to protect the integrity of the game — issues across the country these last several days show there is more work to be done," NCAA president Charlie Baker said in a statement.
As a result, "The NCAA has been working with states to deal with these threats and many are responding by banning college prop bets," the statement added.
On Monday, ESPN reported that the NBA is investigating Toronto Raptors player Jontay Porter over multiple instances of betting irregularities, with prop bets in focus.
The name of Major League Baseball's biggest star, Shohei Ohtani also surfaced recently in a federal probe of illegal sports gambling.
Prop bets — or proposition bets — are wagers unrelated to a contest's final score. An example bet would be how many points or rebounds a basketball player might have, or yards or touchdowns a football player might have, The Athletic website said.
Separately on Wednesday, the Wall Street Journal reported that online gambling companies' VIP programs are under federal scrutiny.
DraftKings Stock, Flutter Stock, Gambling Stocks
Shares of DraftKings skidded 6.8% to 45.35 on the stock market today, reversing lower from a 52-week high intraday. DraftKings stock has fallen back below the top of a short consolidation, but found support at the 21-day line.
Flutter stock tumbled 5.9%, gapping below the 50-day moving average.
Publicly traded companies in the online betting space also include Boyd Gaming, Caesars Entertainment and MGM Resorts. Other gambling stocks include Penn Entertainment and Wynn Resorts. Most of those stocks rose slightly Wednesday.
Gambling Companies Under Scrutiny
Federal lawmakers are starting to scrutinize online betting's targeting of big spenders and VIPs amid concerns about gambling addiction, the WSJ report said.
Sen. Richard Blumenthal sent letters last week to eight online gambling companies, including DraftKings and FanDuel owner Flutter Entertainment.
The letter urged them to stop using player data and other marketing tactics to target customers with gambling problems.
Meanwhile, Rep. Paul Tonko seeks to impose federal oversight of online sports betting in any state that has legalized the business, the report added.
