After the approval of a new sports betting tax in Illinois, DraftKings shares experienced a rebound following a significant decline. The Illinois budget now includes a provision that imposes taxes on sports bets placed in the state, potentially impacting companies like DraftKings. Analysts estimated that DraftKings could face millions in additional taxes due to this new regulation.
Despite this development, DraftKings’ stock has faced challenges this year, with a decline of 8% since the beginning of the year, underperforming compared to the S&P 500 index. The company’s shares rose slightly after the news, signaling investor reactions to the new tax.
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Technical analysis of DraftKings’ weekly chart reveals a bearish flag pattern breakdown. The stock encountered resistance near the 50-day moving average after rallying from the 200-day moving average. This breakdown below the flag’s trendline suggests a potential for further selling pressure.
While the recent decline in DraftKings’ stock price has been on low volume, indicating retail investor influence, investors are advised to monitor key support and resistance levels on the chart. Support levels around $29 and $23 are crucial areas where buying interest may emerge, with $23 representing a significant support level based on historical price movements.
On the flip side, resistance levels at $39 and $47 are important thresholds to watch for potential price barriers as the stock attempts to recover. These levels coincide with previous highs and moving averages, suggesting potential areas of price reversal or consolidation.
Investors are advised to stay vigilant and observe how DraftKings’ stock reacts around these critical price levels in the coming days and weeks. The impact of the new sports betting tax in Illinois on DraftKings’ financial performance remains a key factor to watch in the evolving landscape of the sports betting industry.
As DraftKings navigates through these challenges, market participants will closely monitor how the company manages its operations and financials amid regulatory changes and increasing competition in the sports betting market.
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