Betting Stocks Drop Amid Surge in NFL Prediction Bets on Gambling Apps

Stock prices for major U.S. gaming and sports tech firms fell sharply on Friday, with DraftKings (DKNG) dropping 6.3% and Tradesports Group (TSG) slipping 4.8% after data showed a 72% increase in NFL prediction bets placed through mobile gambling apps during the past week. MGM Resorts (MGM) saw its shares dip 3.1% as the trend raised questions about the long-term profitability of speculative betting volumes. The surge in prediction wagers—particularly on outcome-based bets like 'which team will score first'—has outpaced traditional point spread and moneyline bets, which typically generate higher margins for operators. Analysts note that while higher bet volume may appear positive, the shift toward low-margin prediction bets could pressure earnings. Historical data suggests prediction wagers carry average payout rates exceeding 75%, compared to 65% for traditional spreads, reducing net revenue per transaction. With DKNG reporting a 12% year-over-year decline in adjusted EBITDA during Q4 2025, the current trend adds pressure on profitability expectations. The market reaction reflects broader hesitation among investors regarding the commercial viability of pure-play betting platforms. Despite a 14.3% increase in total betting volume across major apps, the composition of that growth—dominated by low-margin prediction bets—has triggered a reevaluation of valuation multiples. TSG, which relies heavily on digital engagement, saw its P/E ratio fall to 18.4 from 22.1 in early January, while DKNG’s forward P/E now stands at 34.6, below its 52-week average of 38.9. The shift impacts not only public companies but also associated technology providers and content platforms that depend on consistent betting activity. Investors are now closely monitoring whether operators can maintain margins as user behavior evolves toward more speculative, lower-return formats.