DraftKings has not commented on the deal talks, but has admitted to closely eyeing developments in the prediction market.

Research firm Benchmark raised its price target on DraftKings (DKNG) on Tuesday, citing the gambling company's rumored deal talks with prediction market platform Railbird Exchange.

Benchmark raised its price target to $50 from $45, signaling a 15% upside from Tuesday’s close, and maintained its 'Buy' rating, according to the investor note summary on The Fly.

Sports media outlet Front Office Sports reported on Monday, citing a source, that DraftKings is in talks to buy Railbird, a federally licensed prediction market platform that received approval from the Commodity Futures Trading Commission (CFTC) earlier this year.

The report did not mention the financial terms of the deal.

DraftKings told the publication in a statement that, although it would not comment on any deal talks, it "continues to monitor developments related to prediction markets as an emerging product."

Railbird enables users to bet on real-world outcomes across various sports, politics, and macro events, and is legally accessible in states such as California and Texas, where online sports betting remains prohibited.

Benchmark views this potential acquisition as "a very positive development," particularly following DraftKings' previous withdrawal of its application for a federal license.

Railbird's license provides a high-margin, scalable entry point into underpenetrated states while avoiding state gaming and federal excise taxes, Benchmark said.

On Stocktwits, the retail sentiment held in the 'bullish' zone, unchanged from the previous day, and the message volume was 'high.' DKNG shares are up 17.6% year-to-date.

The discussions come amid a widespread industry view that sportsbooks and prediction markets will become intertwined in the coming months, according to the Front Office Sports report. DraftKings previously applied for a federal license to operate a prediction market, but withdrew the application in April.

DraftKings’ competitor FanDuel, operated by Flutter Entertainment (FLUT), is also reportedly eyeing a partnership with Kalshi, a key player in the sports prediction market.

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