24-hour party people
Kalshi first through the door with regulated perp product
Around-the-clock futures trading gets the nod from the CFTC.
In +More: Polymarket partnership, Playgon’s strategic repositioning.
Markets: Investors react to the Caesars take-private bid.
Is Bally’s Intralot calling it too early on the post-RGD hike UK market?
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Live forever
Maybe I just wanna fly: Kalshi was the first through the gate with an approved perpetual futures product after the CFTC cleared the path for a multi-trillion trading market that until now has existed solely offshore.
Wanna live, I don’t wanna die: CEO Tarek Mansour said the launch marked his company’s “evolution from prediction market leader to next-gen derivatives exchange.”
Perpetuals (or perps) are “the next chapter,” he added. “We’ve been building Kalshi toward a vision that every important question about the world should have a market.”
Prediction markets “proved the model: people want to trade their convictions.”
Kalshi will soon be joined by Coinbase, which said it has approval to connect US users to global crypto options and perps, while Kraken plans to launch within 30 days.
Maybe I just wanna breathe: Bloomberg reported that the CFTC issued a staff guidance on how registered platforms can run 24/7 trading, meaning it carries less weight than formal rulemaking and could be unwound by a future administration.
Maybe I just don’t believe: Both the CFTC and the SEC are working on official crypto rules as Congress weighs new laws.
Maybe you’re the same as me: A perpetual future is a leveraged contract with no expiry that lets a trader bet on an asset’s price without ever owning it, holding the position indefinitely so long as margin holds.
They were invented in 2016 by the offshore exchange BitMEX, co-founded by Arthur Hayes (later pardoned by Trump for violating AML and KYC laws), and they’ve lived almost entirely beyond US regulators ever since.
A periodic “funding rate” payment between bulls and bears keeps the price tethered to spot.
Crypto derivatives already account for roughly 80% of global crypto trading volume, per Coinbase.
We see things they’ll never see: The catalyst is the rise of an offshore company called Hyperliquid, a decentralized, Singapore-based platform that has led the advance of perps, and its breakout forced regulators and traditional exchanges to react, the FT reported.
Little known outside crypto circles until the outbreak of the Iran war, Hyperliquid saw a surge of activity in its oil-linked contracts as traders rushed to bet on energy markets outside weekday hours and over weekends.
Last week, the company launched validator-settled prediction markets, moving event resolution directly into its own protocol infrastructure.
Lately, did you ever feel the pain: Intercontinental Exchange (ICE) CEO Jeff Sprecher told Bernstein analysts during an investor conference held last week that Hyperliquid’s rise was “a wake-up call for the industry.”
“It’s bigger than Nasdaq,” he added. “It’s 11 people. You look at it, you’re like, wow, that’s pretty something.”
ICE is an investor in Polymarket, a company that Sprecher told the Bernstein audience was a “true DeFi exchange, in its absolute form.”
“It’s going to bring institutional investors and retail investors together to discover prices and inputs. And we just want to be a part of it, and we want to fully understand the DeFi movement.”
Now’s the time to find out why: Perps increasingly track oil, equities and other real-world assets. And now that they have arrived onshore at scale, this stops being a crypto story and becomes a parallel, leveraged, 24/7 retail market competing with everything else that takes a speculative dollar.
“If a prediction market is a photograph of what the world thinks right now, a perpetual is a film – continuously updated, never ending, always present,” said Mansour.
“Like we did with prediction markets, we’ve rebuilt perps from the ground up, regulated first and institutional-grade.”
“An American exchange, under American law, offering the most expressive financial instrument ever designed, to anyone with a view worth trading.”
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+More
Polymarket has partnered with Berlin-based media group OneFootball to integrate soccer-focused prediction market experiences across its global media ecosystem. OneFootball said it reaches more than 645-million monthly fans, who will now be able to access markets covering matches, transfers and tournament outcomes directly within its platform.
Playgon Games has announced a major strategic repositioning focused on AI-powered live casino technology, alongside plans for a 100-for-1 share consolidation, a name change to Dealone Interactive, a debt restructuring and a private placement of up to C$10m ($7.2m). The company said it is shifting from a traditional live dealer studio model toward a scalable software and licensing strategy, including AI dealers and remote live slots.
Deal talk
Veikkaus could be worth up to €4.5bn were it to be sold off by the Finnish state, according to consultant Jari Vähänen. Speaking to the financial media in Finland, Vähänen said a “couple of gaming companies have contacted us and wondered if Veikkaus might be for sale.” Currently, the gaming monopoly generates a surplus for the Finnish state of ~€450m a year. He added that the digital business would be worth ~€1bn-€1.5bn.
Data points
Macau: GGR for May was up 6.7% to $2.8bn, a 13.6% sequential leap and leaving the YTD figure up 10.9% to $13.4bn. The uplift for May was driven by two holidays during the month.
Dig deeper
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Turning defensible into offense: Kambi’s Werner Becher.
Learning curve: Genius Sports’ Mark Locke.
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Seth Young, CEO at High Roller Technologies, Thursday.
Aviv Sher from Codere Online, June 9.
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Markets
Crowded house: If the analysts are right, this week’s 16% rise for MGM Resorts might be an early sign of what the team at JP Morgan suggested is a potential “crowding” into the stock due to the likely Caesars take-private deal leaving equity investors with one fewer proxies to “express their LV Strip views.”
MGM’s uplift came in the wake of the news last week of the acceptance of privately held Fertitta Entertainment’s $17.6bn bid for rival Caesars.
While there is a ‘go-shop’ provision in place until July, the analysts are unanimous that there is unlikely to be any other bidders.
Take my breath away: After Golden Entertainment’s management-led take-private earlier this year, it leaves investors with MGM, Boyd Gaming (downtown and locals), Red Rock Resorts (locals only) and Penn Entertainment (M Resort), as the remaining publicly traded gaming stocks with a Nevada footprint.
The possibility that each might be involved in some opportunistic M&A as the new Caesars/Fertitta combo seeks to offload assets also helped boost prices across the land-based sector.
JP Morgan said that six out of eight of Fertitta’s Golden Nugget casinos have overlap with Caesars properties, including in Vegas and Atlantic City.
Ready to eat: The analysts at CBRE said the sector is “ripe for more transactions activity,” suggesting there will be further leverage buyout of MBO activity given the free cash flow characteristics of the sector, proven revenue generation and low public valuations.
Among the companies identified as potential take-privates are Accel Entertainment, Entain, MGM, Melco Resorts and Penn.
Conversely, the team also sees Penn, MGM, Boyd and Churchill Downs as potentially benefiting from recycling of the Caesars equity element (~$5.7bn) into other gaming stocks.
Spin speed: The possibility of a digital spin and/or a sale of Caesars’ digital business is another possibility that could be on the agenda once the deal is finalized in a year’s time.
Tilman Fertitta has form in offloading digital assets, having previously sold the Golden Nugget Online Gaming business to DraftKings in 2021 for $1.56bn in stock.
The team at CBRE noted the previous speculation about a digital spin and added that they “still see a path” for a transaction, which could look similar to the SPAC then subsequent sale of Golden Nugget.
They estimated the digital business could be worth ~$5.3bn, based on a 12x multiple of its FY27 EBITDA estimate of $443m.
Pay the rent: Another factor in the deal is the situation with VICI, which the team at Truist reported to be happy about the “positive ramifications” from the deal in that it will help achieve further diversification of its rent roll.
As Truist pointed out, Caesars properties currently represent 38% of VICI’s portfolio of assets.
Fertitta Entertainment could try to reduce its exposure to leased properties and “might have preference for some markets over others.”
Las Vegas’ April
Turnaround: Strip gaming revenue rose 7% YoY in April to $689m, the third straight month of growth and a sign Q2 could mark an inflection point for the market. Slot revenue gained 5% on flat hold, while table revenue jumped 9% as hold climbed ~170bps despite a 4% drop in volume.
Baccarat win surged 15% to $125m on a 250bps hold benefit, though normalized GGR (adjusting hold to trend) rose just 1%.
The locals market was flat: slot handle soared 33% but softer hold capped gains.
However, visitation slipped 2% and Strip RevPAR fell 1%, with air traffic down 7% after Spirit’s May 2 shutdown.
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VIPs MIA?
Tis but a scratch: Bally’s Intralot used its Q1 call to press the message that the doubling of UK remote gaming duty to 40% on April 1 is a tailwind, not a headwind. Off the back of UK online growth of 10.5% in the quarter, April NGR was up 11.5% YoY, and CEO Robeson Reeves said May was running at double-digits and “accelerating.”
“The plan is working,” he told analysts, citing 60%-plus rise in new-customer volumes for the same marketing spend, smaller rivals retreating and margins wide enough to absorb the hit.
I’ve had worse: But analysts speaking to E+M were not so sure the verdict is yet in. Talking in an anonymous capacity, one said that operators with large repeat-customer bases won’t feel a tax change for months.
Players who deposited in Q1 keep playing into Q2, carrying the business through even as margins are “obliterated,” they argued.
The real test is cumulative. “This is still only two months’ worth of data,” the analysts added. “It’s way too early.”
It’s just a flesh wound: That caution is not far from what Bally’s Intralot itself conceded between the lines. Reeves acknowledged that marketing spend was deliberately held flat in Q1 and that headcount and generosity savings have barely touched the numbers yet, with the bigger effects landing “into Q2 and onwards.”
His suggestion that rival operators only adjust “when you start to pay the bills fully” is an admission that the post-tax shake-out has scarcely begun.
What are you gonna do, bleed on me? A more problematic issue, however, is what Reeves had to say about VIPs, where he argued that high-value players have “already been displaced” to the black market over the past five years.
Hence, he seemed to suggest that affordability measures and the duty rise pose little risk to a business built on mass-market, lower-spending customers.
But the analysts said the VIPs haven’t left, but rather they are spreading themselves around.
“It looks like VIPs have left, but each operator only has a fifth of a VIP now.”
We’ll call it a draw: The appearance of exit is fragmentation across a wider set of sites not a genuine migration out of the regulated market; a materially different diagnosis with different implications for where the money actually sits.
One analyst added that a regulatory wrinkle worth watching is whether the pause on affordability checks is a Treasury maneuver rather than a Gambling Commission one.
The Commission, they suggested, had little appetite to pause, but the Treasury may want a clean read on how the tax lands.
Bally’s Intralot’s upbeat early messaging, then, “might be great for shareholders but terrible for the lobbying argument being put forward by the industry as a whole.”
An operator publicly thriving under a 40% duty undercuts the sector’s case that the rise is ruinous.
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