Truist Securities has kept its Buy ratings on DraftKings and Flutter, while warning that the US gaming sector could face more pressure in 2026. In its 2026 US gaming outlook released on 13 January, the bank highlighted prediction markets and higher state taxes as major challenges for the industry.

Even with these risks, Truist said digital gaming should continue to grow this year. It added that legal fights around prediction markets may increase and influence how investors see traditional sports betting companies. The bank also said results toward the end of 2025 were stronger and expects some operators to give cautious guidance for 2026.

Prediction markets and tax risks in focus

Truist analyst Barry Jonas said companies are likely to be careful when setting expectations for the year ahead. He explained that stronger betting results at the end of 2025 could lead firms to take a conservative approach early in 2026. “Higher taxes may be less of an issue in 2026, though we also don’t see much legalisation right away (beyond Maine). Prediction market legal battles will heighten in 2026, and while not without risks – DraftKings and Flutter are positioned if it flourishes or goes away,” Jonas stated.

Truist also shared its wider market outlook, forecasting that the US interactive gaming market will reach $33.1bn in 2026. This includes $17.7bn from online sports betting and $15.4bn from iGaming, with the total market expected to grow to $73.8bn by 2030.

DraftKings seen gaining ground

Truist remains positive on DraftKings and kept its price target at $45 per share. Jonas highlighted that the company is well positioned to gain market share and benefit from its strong focus on the US. “We favour DraftKings as 2026 consensus EBITDA expectations seem reasonable, market share gains become evident and US concentration helps given rising international taxes,” he said.

State-reported data cited by Truist shows DraftKings gained ground on FanDuel in 2025, leading in nine of 11 months. The bank expects DraftKings to generate $940m in adjusted EBITDA in 2026, up from about $500m in 2025.

Flutter steady, MGM downgraded

Truist also kept its Buy rating on Flutter but cut its price target from $280 to $260 per share. The bank said Flutter still faces challenges from international taxes, including business closures in India and higher taxes in the UK and Brazil.

For land-based casinos, Truist downgraded MGM Resorts from Buy to Hold and lowered its price target from $45 to $38. Jonas said it may be too early to expect a strong recovery in Las Vegas in 2026, even with a better convention calendar. Truist expects MGM’s Strip EBITDAR to drop by 1% year on year.