Published on: December 31, 2025, at 01:19h.
Updated on: December 31, 2025, at 01:19h.
- 2025 proved challenging for sports betting stocks.
- DraftKings stands out as the sole gaming stock on the bank’s list of nearly 60 equity recommendations for 2026.
In 2025, DraftKings (NASDAQ: DKNG) experienced a disappointing year, declining by 6.53% while the S&P 500 enjoyed a nearly 17% increase. However, some analysts anticipate a more promising year ahead for this sportsbook’s shares.
DraftKings has made it to J.P. Morgan’s exclusive list of 57 top stock picks for 2026 and is highlighted as the only gaming stock among several in the consumer discretionary sector. The bank has designated DraftKings as “overweight,” setting a target price of $42, suggesting an upward potential of over 20% from its current valuation.
J.P. Morgan pointed out key attributes of companies on its top ideas list for 2026, including robust balance sheets and management teams known for effective capital allocation and gaining from industry consolidation.
With a strong balance sheet, DraftKings has previously enhanced its technological capabilities through strategic acquisitions and has ventured into new sectors such as internet lottery and prediction markets. Notably, the recent introduction of DraftKings Predictions will challenge the company’s operational prowess in 2026.
Potential Gains for DraftKings Amid ‘K-Shaped Economy’
In 2026, DraftKings may see advantages in a “K-shaped economy,” where different sectors recover at uneven rates following economic downturns.
“The exact implications hinge on how overall macroeconomic data reveals a K-shaped profile,” states Investopedia. “This may involve certain industries rebounding swiftly while others falter, asset values fluctuating, or a growing wealth gap where some demographic groups ascend while others face declines.”
For DraftKings specifically, a K-shaped recovery could favor the company if higher income levels and wealth effects enhance spending among affluent gamblers.
Moreover, a recovery in middle-income demographics could also serve the company well, particularly as tax incentives from President Trump’s One Big Beautiful Bill Act (OBBBA) come into play. The upcoming year will be significant as new benefits like tax exemptions on overtime and tips begin.
Focus on DraftKings’ Investment Strategies
J.P. Morgan advises investors to keep an eye on capital return strategies in 2026, noting that share repurchase plans and dividends could influence stock price movements. Although DraftKings is not expected to issue dividends in the near term, in November, it expanded its buyback program from $1 billion to $2 billion.
While companies are not compelled to repurchase shares merely because they announce related plans, DraftKings has gradually bought back shares since initiating its repurchase strategy. Analysts and investors will closely observe how investments in prediction markets affect the operator’s shareholder reward initiatives throughout 2026.