DraftKings (DKNG) and Flutter Entertainment (FLUT) 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, 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 on Wednesday.
"The NCAA has been working with states to deal with these threats and many are responding by banning college prop bets," the statement added.
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.
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.
Separately on Wednesday, the Wall Street Journal reported that online gambling VIP programs are under federal scrutiny.
All of this comes in the wake of a scandal involving Major League Baseball's biggest star, Shohei Ohtani. Two weeks ago, the name of the Los Angeles Dodgers slugger surfaced in a federal investigation of illegal sports gambling. Millions of dollars were allegedly sent from his bank account to an illicit bookmaker, the Los Angeles Times reported.
Things got more murky Monday. Ohtani claimed in a news conference that his interpreter stole the money to pay a bookmaker and the ballplayer knew nothing about it. That begged the question of how such a large theft could go unnoticed for so long.
DraftKings Stock, Flutter Stock, Gambling Stocks
Shares of DraftKings skidded 6.7% to 45.44 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.
Gambling Companies Under Scrutiny
Federal lawmakers concerned about gambling addiction are starting to scrutinize online betting's targeting of big spenders and VIPs, the WSJ report said.
Sen. Richard Blumenthal sent letters last week to eight online gambling companies, including FanDuel owner Flutter Entertainment and DraftKings.
The letter urged them to stop using player data and other marketing tactics to target customers with gambling problems.
Meanwhile, Rep. Paul Tonko says he is working on legislation to impose federal oversight of online sports betting in any state that has legalized the business, the report added.
https://www.investors.com/news/draftkings-stock-futter-tumble-ncaa-crackdown/
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