Zhitong Finance learned that on Wednesday, after National Collegiate Athletic Association (NCAA) Chairman Charlie Baker announced that he was pushing for a ban on college gambling, DraftKings (DKNG.US) stock price fell. University “proposition betting (proposition betting)” is a popular type of collateral gambling that allows participants to bet on events or statistical results that are not directly related to the final outcome of a match. The company's stock price closed down 6.8% on Wednesday, with an intraday decline of up to 8.8%, driving down mobile sports betting peers including FanDuel's parent company Flutter Entertainment PLC (FLUT.US) and MGM Resorts (MGM.US).

Baker announced that the National Collegiate Athletic Association is working with state lawmakers to abolish college gambling nationwide, saying the organization is “delineating the boundaries of sports betting to protect student athletes and protect the integrity of the game.” Meanwhile, reports say US federal lawmakers are seeking more regulation of gambling companies, urging them to stop using player data and other marketing strategies to target customers with gambling problems.

“Our industry looks forward to constructive dialogue with the NCAA, gaming regulators, and other stakeholders to ensure a healthy legal sports betting market and provide regulatory guarantees to protect the integrity of consumers, athletes, and games,” Chris Cylke, senior vice president of government relations at the American Gaming Association, said in an email statement.

A “proposition bet” is a bet on a market other than the standard spread, funding line, and total amount. Proposition betting focuses on segmented parts of the game, such as individual team or player performance, and external events and contingencies within the event. Proposition betting allows gamblers to bet on different aspects of the game or event in addition to the standard full-game odds. “Proposition betting” first appeared in the 20th Super Bowl in 1986, when Las Vegas betting companies bet on whether Chicago's famous defensive tackle and sprinter William Perry could touch the ground.

The unique nature and excitement of these alternative markets quickly became popular in the US, and proposition betting became a staple of Super Bowl betting. This demand ultimately goes beyond large-scale games. With the advent of online sports betting, there are now a variety of item markets to choose from for the regular season of almost every sport. In the past, proposition betting was viewed as a “fool's bet,” but with the popularity of sports and advances in analytical technology, proposition betting is growing every year, and it is a market where many keen gamblers seek change and value.

Sports betting has exploded in the US since the Supreme Court lifted the ban in 2018. Wall Street analysts have always been optimistic about DraftKings as a leader in the emerging North American online betting business because of its new betting market prospects and growing popularity among fans. According to compiled data, the stock has 29 buy ratings, 7 holding ratings, and only 1 sell rating.

However, signs that further regulation may be needed have plagued the industry. Major League Baseball (Major League Baseball) superstar Shohei Ohtani has been involved in a gambling scandal over the past few weeks, and the NBA is investigating a player for allegedly gambling in violation of regulations several times.

However, Needham & Co analyst Bernie McTernan said that the ban on gambling at college sporting events is not expected to have a substantial impact on DraftKings' financial performance. Gambling accounts for about 1.4% of total bets in 2023, he said. “We expect to see these kinds of headlines from time to time, but largely expect them to be forgotten,” McTernan wrote in a note to clients on Wednesday.

DraftKings shares are still up about 29% this year, closing at a 52-week high on Tuesday.