Bank of America spent a year on the sidelines watching DraftKings get hammered by prediction-market rivals, and now it has reversed course with a bold call that sent shares surging while Flutter and MGM barely moved.

The analysts expect DraftKings could rake in $400 million in fees next year and an additional $200 million to $400 million from market making. The upgrade comes amid concerns about prediction markets crowding out traditional sports books. 

Trading volume on prediction markets has surged in recent years, and the top two platforms, Kalshi and Polymarket, have seen most users’ money flowing into sports-related wagers. The proliferation of prediction markets posed an existential threat to traditional sports books including DraftKings and FanDuel, which faced more restrictions on where they could operate compared to federally regulated prediction markets. 

To hedge their bets, DraftKings and FanDuel both launched prediction markets of their own, sparking concerns the new business could cannibalize their existing sports books. That hasn’t been the case, and at the same time, the massive popularity of placing sports wagers seems to have made room for both markets.