The state of Illinois has issued a tax hike on gambling profits – DKNG down 12% on the news, Flutter 7%.
Before efforts to mitigate the tax hike, Citi analysts said it could cost Flutter $94 million if in place over a full year. Mitigation may come from lower promotional spending, the firm said.
BTIG analysts said they don't see momentum for similar tax hikes in other states. Last week, the Massachusetts State Senate defeated an amendment that would have hiked the state's sports betting tax from 20% to 51%, which would have matched New York's for the highest in the nation.
This news should blow over quickly and currently presents a great opportunity to buy a market leader at a good discount.
I expect shares to climb back to the $42-$47 range over the next 4-8 weeks, an increase of roughly 18-32%.
(not financial advice).
Position: Currently own 1120 shares @$17 average and looking to increase position by ~30%.
EDIT: I now own 2550 shares.
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