Trump Tailwind? How the BBB Could Boost DraftKings Stock

Key Points

• Buried in the One Big Beautiful Bill is a significant change to how the government will tax sports bettors.
• Pro bettors are likely to feel the biggest sting, a positive for DraftKings' margins.
• Combined with the prospects of expanding its addressable market, the outlook for DraftKings stock looks favorable.

President Donald Trump made headlines with the signing of his first major piece of legislation: the One Big Beautiful Bill (BBB). Most of the attention has gone toward the extension of Trump's tax cuts and changes to federal programs like Medicaid.

However, embedded in the approximately 870-page law is a significant change to how the federal government taxes gamblers.

This has notable implications for the rapidly growing sports betting giant DraftKings NASDAQ: DKNG. The bill could ultimately provide a significant tailwind for the consumer discretionary stock, as it hurts those that cause DraftKings to lose money.

Let’s dive into the specifics and why investors should care below.

The BBB Makes Winning Money Betting Much Harder For Pros

The BBB contains a key change in tax law with huge ramifications for those who cut into DraftKings’ profits: professional gamblers. Traditionally, bettors can deduct 100% of their losses from their winnings when they calculate their income taxes. That means if they had $100,000 in winning bets and $100,000 in losing bets, they made no profit and paid no additional tax. However, due to the BBB, beginning in 2026, gamblers will only be able to deduct 90% of their losses. Under the same scenario, they could now only deduct $90,000 from their $100,000 in winnings. This means that their taxable income will be $10,000 higher. They will now have to pay taxes on that $10,000, turning what was once a break-even year into a loss.

Although this change technically affects all gamblers, it is likely to have the most detrimental effect on professionals. They make their living by betting and are much more likely to report their betting gains and losses on their taxes. Overall, the BBB makes it much harder for these professional bettors to generate an after-tax profit. So, what does this mean for DraftKings?

DraftKings’ Margins Look Poised to Get a Boost

For pros to earn money, someone has to lose money; that someone is DraftKings. As it becomes much harder for these bettors to turn a profit, they are likely to cut back significantly on their bets at DraftKings. Thus, the chance that DraftKings will lose money decreases, as a higher percentage of users will be casual bettors. This can help push DraftKings' margins up as it pays out less to winners.

Still, DraftKings' betting volume should decrease, slowing their revenue growth. However, the company is likely fine with this. Pro bettor volume does little good for the company if it is losing money on these bets anyway.

Comments made by renowned gambler Steve Fezzik crystallize the negative effect on professional bettors. Fezzik is the only two-time winner of the Las Vegas Hilton SuperContest, widely regarded as the world’s most prestigious sports betting contest.

On a recent podcast appearance, Fezzik called the Big Beautiful Bill “a disaster for professional sports bettors." For the reasons explained above, Fezzik said DraftKings is “perfectly happy” with the BBB changes. He ultimately suggested that many pro bettors will consider taking a year off gambling if the new rule is not amended by the start of 2026.

These comments clearly point to the idea that the BBB is good for DraftKings. If margins increase due to these changes, DraftKings' stock could benefit substantially in 2026.

DraftKings Growth Prospects Remain Strong Despite Near-Term Headwinds

While potential boosts to margins are great, DraftKings still needs to grow its betting volume and revenues for the stock to gain. The company is also dealing with betting tax hikes from multiple states that are likely to negatively impact its growth. Illinois enacted a law that requires sportsbooks to pay a tax of $0.25 on the first 20 million wagers. For any wagers over that limit, the tax increases to $0.50. In response, DraftKings and competitor Flutter Entertainment NYSE: FLUT will charge Illinois bettors a $0.50 fee per bet. Increasing costs for bettors are likely to negatively impact volume.

Still, the long-term outlook for DraftKings' volume remains strong. Currently, only 30 states, as well as the District of Columbia and Puerto Rico, allow online sports betting. The states that do not allow online betting include Texas and California, which hold around 20% of the U.S. population. Thus, DraftKings has a great chance to grow its addressable market through further legalization. This could lead to a significant boost in volumes over time. This, combined with pushing out pro bettors, could create a perfect storm for the stock in the long run.