DraftKings Stock Price Levels to Watch After Approval of New Illinois Sports Betting Tax

DraftKings (DKNG) shares rebounded on Tuesday from a steep decline the previous session that followed news Illinois lawmakers had passed a budget that includes a new sports betting tax.

The budget includes a new provision taxing every sports bet made in Illinois by 25 cents for the first 20 million wagers a company takes and 50 cents for each bet past that threshold. Citi analysts on Monday estimated that DraftKings would have been subject to roughly $68 million in additional taxes if the new tax had been in effect over the last 12 months. 

Shares of the company are down 8% since the start of the year, lagging the performance of the benchmark S&P 500 index, amid increasing competition among sports betting companies. The stock rose 1.8% to $34.32 on Tuesday, after dropping 6% the day before.

Below, we take a closer look at DraftKings’ weekly chart and apply technical analysis to point out crucial price levels that investors will likely be watching.

Flag Pattern Breakdown

After finding buying interest around the 200-day moving average (MA), DraftKings shares rallied within a bearish flag before encountering resistance near the 50-day MA. Since that time, the stock has continued to track lower, with the price breaking down below the flag’s bottom trendline in Monday’s trading session, potentially setting the stage for further selling.

However, it’s worth noting that the stock’s recent weakness has occurred on declining volume, indicating that retail investors rather than larger market participants have driven the price action.

Let’s identify several crucial support and resistance levels on DraftKings’ chart worth watching.

Support Levels to Watch

The first lower level to watch sits around $29, an area on the chart where the shares may attract support near last year’s prominent August trough.

A close below this level opens the door for a more significant drop to lower support around $23. Investors may seek buying opportunities in this region near the February 2022 countertrend peak and the lower range of a brief consolidation period that formed on the chart in May 2023.

Interestingly, this level also sits in the same neighborhood as a projected bars pattern target that takes the sharp trend lower that preceded the flag and repositions it from the pattern’s top trendline, providing insight into how a potential continuation move lower may play out.

Resistance Levels to Monitor

During recovery efforts in the stock, investors should initially monitor the $39 level. The shares may encounter resistance in this area near last month’s high and the 50-day MA, which also closely aligns with several peaks and troughs on the chart stretching back to November last year.

Finally, buying above this level could see DraftKings shares climb toward $47. Investors who have bought at lower prices may seek exit points in this area near a series of corresponding prices situated just below last year’s March peak.

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As of the date this article was written, the author does not own any of the above securities.