What happened

Shares of DraftKings (DKNG 0.52%) were down 3.5% in afternoon trading Wednesday despite the Florida legislature approving a sports betting and expanded casino gaming bill. 

The sportsbook's stock, which is down 42% from highs hit in March, also got another vote of confidence from Wall Street money manager Cathie Wood, whose Ark Investment Management bought an additional 708,000 shares of its stock yesterday.

Smiling friends holding a basketball laughing

Image source: Getty Images.

So what

Although the measure passed, it will face legal challenges because it violates a voter amendment to the state constitution that only permits casino games to be held on Seminole Tribe tribal land. Under the bill that was approved, wagers could now be placed at horse tracks, jai alai arenas, and former dog tracks. The legislation also allows the Seminole Tribe to add roulette and craps to the seven casinos it operates.

The Seminole Tribe of Florida has exclusive rights to certain kinds of gambling in the state, and has the right to assign licenses to sportsbooks.

Now what

While Florida is an important state for sportsbooks like DraftKings, New York is perhaps the crown jewel market for sports betting -- and once it is approved there the state could readily surpass next door New Jersey as the premiere sports betting capital in the country.

Analysts recently downgraded DraftKings stock due to valuation concerns, but Wood has been buying shares all along. Her ARK Next Generation Internet exchange-traded fund now owns 2.2 million shares. The ARK Innovation ETF owns over 8 million shares.