Online gambling and sports betting is such a huge opportunity that most of Wall Street is missing the significance, according to one analyst who initiated DraftKings (NASDAQ:DKNG) coverage at a buy and set a $100 per share price target on Tuesday.

That's more than double where the sports betting leader is currently valued and factors in the online sports betting and gambling market being at least 50% greater than what analysts are modeling.

Man placing bet on smartphone

Image source: Getty Images.

Betting big

Loop Capital analyst Daniel Adam told investors in a research note that DraftKings is worth every bit of the C-note he's pegged the stock at because the "true total addressable market" of internet-based sports wagering and gaming is over $30 billion, "significantly greater" than the $20 billion other analysts are factoring into their assessments.

Moreover, he expects DraftKings to become the "undisputed share leader and biggest beneficiary" of the "rapidly growing" online gambling market.

The potential is there. DraftKings and rival FanDuel are the leaders in New Jersey, which has become far and away the biggest online sports betting and gaming market, taking in more than $800 million in just sports wagers in October. 

Pennsylvania also just reported a huge sports betting haul for the month, over $500 million, with 90% of it coming online, and both DraftKings and Penn National Gaming leading the way.

Twenty-one states currently allow online sports betting, and three more states -- Maryland, Louisiana, and South Dakota -- just approved ballot measures permitting it.

The one ingredient seemingly missing from Adam's analysis is the dominant position of Flutter Entertainment's (OTC: PDYPF) FanDuel in the country's most important market. While it has a 40% share of the national market to DraftKing's 35% share, in New Jersey FanDuel is the overwhelming leader, owning nearly two-thirds of the market while DraftKings is a distant second.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.