The rise of prediction markets has sent DraftKings Inc ( DKNG ) and Flutter Entertainment PLC ( FLUT ) shares lower. While some investors and analysts see prediction markets as a major competitor, an analyst said the selloff is overdone and both companies have a $5 billion opportunity of their own in the market.

The DKNG, FLUT Analyst: Macquarie analyst Chad Beynon maintained an Outperform rating on DraftKings ( DKNG ) with a price target of $48.

Beynon maintained an Outperform rating on Flutter Entertainment ( FLUT ) with a price target of $330.

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The Analyst Takeaways: A recent sell-off in the shares of the sports betting giants is "unwarranted," Beynon said in a new investor note.

With the pending launch of FanDuel Predicts and DraftKings Predictions in the coming months, Beynon sees a $5 billion total addressable market for DraftKings ( DKNG ) and Flutter in the prediction markets space, based on 40% of the U.S. population. The estimate includes $4.4 billion for sports prediction markets and $600 million for non-sports prediction markets.

With the new TAM estimate, Beynon sees EBITDA growth for both sports betting companies.

"Our contention has been that prediction markets are not competitive with sportsbooks when it comes to live betting, player props and parlays," Beynon said.

The analyst estimates that DraftKings ( DKNG ) and Flutter can hit market shares of 14% and 16%, respectively, in prediction markets for states that have not legalized online sports betting. The analyst said prediction markets could be a net benefit to EBITDA for both companies.

"We maintain that the sell-off is overdone, and view now as an opportune time for investors to buy two best-in-class B2C Online operators at a discount."

DraftKings ( DKNG ) and Flutter have lost around $10 billion and $20 billion in their respective market capitalizations since the end of August.

Beynon said the market is pricing in the "worst-case TAM scenario," which would be that every state legalizes online sports betting and doesn't allow DraftKings ( DKNG ) and Flutter to launch prediction markets in the states.

The analyst note from Macquarie comes after BofA Securities recently downgraded both DraftKings ( DKNG ) and Flutter and lowered the price targets with prediction markets listed as one of the biggest negative catalysts for the companies.

DKNG, FLUT Price Action: DraftKings ( DKNG ) stock closed Monday down 1.83% to $29.44 versus a 52-week trading range of $26.23 to $53.61. DraftKings ( DKNG ) shares were down 18.9% year-to-date in 2025.

Flutter stock closed Monday down 0.79% to $191.79 versus a 52-week trading range of $189.33 to $313.69. Flutter shares are down 24.7% year-to-date in 2025.

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