A sector divided
M&A lifts casinos while predictions hit online heavyweights
MGM and Caesars bid talk stimulates year-to-date gains.
In +More: Salz resigns at struggling Rivalry.
Scorecard: Jefferies assesses the predictions boom in June.
Put+takes: B&M gaming Q2 preview, World Cup betting estimate upped.
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Dividing line
Up where we belong: Bidding activity surrounding both of the the giants of Las Vegas gaming – MGM Resorts and Caesars Entertainment – was the driver of significantly improved share price performance from the pair, with each up 29% YTD.
First, Caesars announced it had accepted an $18bn take-private offer from Fertitta Entertainment in late May.
It was followed within days by MGM Resorts receiving a bid from long-term shareholder, Barry Diller’s People Inc.
Song for the dumped: Heading in the opposite direction, the online giants Flutter Entertainment and DraftKings have taken a beating as investor confidence in their stories has waned as the momentum for prediction markets has accelerated.
Flutter’s 51% fall has confirmed its fallen-giant status after the company long since ceded its previous status as the largest company in the sector by market cap.
It is now worth $18.4bn vs. market leader Las Vegas Sands’ $30.9bn.
DraftKings has suffered less, down 25% with a market cap of $12.9bn.
Bubble bath: Notably, if Kalshi were to complete its rumored next funding round at a value of $40bn it would immediately catapult it to the top of the list, valuing it at ~$9bn more than Flutter and DraftKings combined.
M&A special situations also account for another two of the top-10 performers. Overall biggest winner YTD is Evoke, at 110%, after it was finally the subject of an offer from Bally’s Interactive at 46.5p-a-share vs. the price at the start of the year of 22p.
Then DoubleDown Interactive gained 31% after it was the subject of a bid from a major shareholder, which analysts nonetheless argued undervalues the business.
Bad data: In the losers column, a bad reaction to M&A also accounts for Genius Sports’ 40% fall YTD after investors reacted poorly to its acquisition of casino-to-sport affiliate provider Legend.
The company also suffered from the prediction markets disruption alongside fellow data- and betting-services provider Sportradar, down 36%. Though recent data deals point to each being net beneficiaries over time.
While the online giants suffered, their lesser brethren enjoyed significantly more positive half-years, with Rush Street Interactive being the standout, up 64% with investors warming to its iCasino-first story.
Super Group, meanwhile, continued its share price renaissance from last year and has added 25%.
Knitting pattern: Conversely, as discussed last week, Penn Entertainment has been rewarded this year for ditching its pretensions to being a major sportsbook provider and concentrating on its B&M regional gaming footprint.
With Penn, investors now appear comfortable with owning a mature casino business capable of converting revenue into cash.
After several years in which digital expansion dominated sector narratives, dependable land-based earnings are once again being rewarded.
The avoidance trade: One unifying trend over the half-year is weakness among any Macau-related stocks. Alongside SJM and Sands China, down 37% and 32% respectively, Galaxy Entertainment is down 22% YTD and Sands China’s parent Las Vegas Sands is off by 28%.
Wynn Resorts, meanwhile, is down 21%, hurt both by investor wariness about Macau and fears over what the Gulf conflict will mean for its long-term hopes for Al Marjan Island in the UAE.
Investor perceptions on Macau suggest persistent wariness over the GGR recovery, the Chinese economy and fears over geopolitical risk, noted the analysts at Seaport.
Boxed up: Sector minnow GiG Software aside – down 56% as it continues to struggle to justify listed status – the gaming suppliers have enjoyed relatively decent years, led by relatively box fresh Stockholm-listed Hacksaw Gaming.
Just outside the top 10, Kambi is up 21%, Playtech rose 17% and the biggie, Evolution, was up 6%.
In the case of the last pair, investors are clearly trying to ignore the now long-running legal dispute that is crawling through the New Jersey court.
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+More
DigiPlus: Betplay Capital, representing the Juroszek family foundations and holding about 1.4% of DigiPlus, has urged the company’s board to launch a substantial share buyback. It argues DigiPlus is materially undervalued, trading at roughly 2.4x 2026 EBITDA and offering a 32% free-cash-flow yield, despite strong growth prospects and more than PHP20bn ($325m) in cash.
Mateusz Juroszek continues to nudge up his ownership of gaming affiliate provider Gentoo Media after the company announced his MJ Foundation Fundacja Rodzinna had added 129k shares to his existing 14%+ stake.
Going, going… Rivalry’s CEO Steven Salz has resigned his post, although he remains on the board of the struggling esports-focused betting operator. The announcement came with the news that the Toronto-listed company has been relegated to tier-2 status on the TSX.
All mod cons: A Sunday Times splash yesterday suggested Reform advisor and ‘Nigel Farage whisperer’ George Cottrell is intimately involved with a crypto gambling entity called Tether.bet, which works out of Montenegro. Cottrell also has ties to Tony Bloom and his Starlizard organization, as was detailed in a London trial earlier this year.
Deal talk
Merkur Casino Entertainment UK is set to acquire Victoria Gate Casino in Leeds after the city council approved transfer of the venue’s large-casino premises license. The 50,000-square-foot, 24-hour property opened in 2017.
Read ahead
Will you still want me when I’m nothing new? The EU’s financial markets regulator has stated that prediction markets may fall squarely within the existing product proscription against binary options. See tomorrow’s Compliance+More.
Scorecard – prediction volumes
Sound and vision: Prediction market activity accelerated sharply in June, with industry average daily volume (ADV) rising 80% MoM to $1.71bn and up over 2,000% YoY, according to the latest tracker data from Jefferies.
Kalshi was the principal driver, with ADV up 90% to $1.1bn and its market share increasing to 64% from 61% in May.
Polymarket’s ADV rose 64% to $469m, although its share slipped to 27% from 30%, while the other platforms tracked generated $140m, up 58%.
Unsettled outlook: Open interest – a snapshot of the cash currently live across the markets – also expanded strongly, increasing 64% MoM to $1.92bn. Kalshi’s open interest almost doubled to $1.21bn, giving it a 63% share, compared with 54% in May.
Polymarket’s open interest increased only 9% to $569m, reducing its share to 30% from 45%.
Other platforms accounted for $137m, helped by the arrival and expansion of newer offerings.
Sports remained the dominant volume category. Sports ADV across Kalshi and Polymarket increased 89% to $1.48bn, while non-sports volume rose 93% to $723m. Sports represented around 67% of total volume, broadly unchanged from May.
The open-interest mix shifted more dramatically, however, as sports open interest jumped 246% to $1.18bn.
Non-sports remained slightly larger at $1.25bn, but its share fell to 51% from 73%.
Predictions+More
Cboe Global Markets has asked the Securities and Exchange Commission for permission to list event contracts tied to quarterly results from publicly traded companies. The binary contracts would allow traders to take yes/no positions on whether businesses meet indicators such as revenue or earnings per share.
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Puts+takes
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Just the ticket: In a sector that, as Deutsche Bank suggests, “feels increasingly picked over, and shrinking by the day,” the analysts see a differentiated and underappreciated opportunity with the lottery provider.
See this morning’s Puts+Takes edition (PRO subs only).
B&M gaming
Group text: The underlying health of the land-based casino sector remains solid, but growth is becoming harder to find across its major markets, said the team at Jefferies, who believe Las Vegas will deliver a positive Q2 helped by easier comps, stronger attendance and robust high-end baccarat play.
However, the recovery is being driven more by group business than leisure travel, leaving operators exposed if the convention calendar weakens.
Flat visitor volumes and promotional activity aimed at supporting lower-end spending also suggest the mass-market consumer remains cautious.
Going steady: Regional casinos present a steadier picture, with GGR across the 25 states tracked by Jefferies rising 5.1% through May, with core customers continuing to spend.
Improving balance sheets could encourage further consolidation.
This could give operators opportunities to add scale and improve returns through acquisitions rather than relying solely on organic growth, said the analysts.
As per above, Macau represents the clearest challenge. June revenue fell 12.1% YoY and comparisons become progressively tougher in the second half.
Operators focused on premium customers appear better positioned, while those repositioning their properties may face continued margin pressure.
World Cup betting
Cup overfloweth: Deutsche Bank estimates total betting handle on the 2026 World Cup will reach $3.4bn-$3.8bn, ahead of its previous $3.3bn base case, based on New York data covering 61 of the tournament’s 104 matches. However, mixed operator hold has limited the benefit of higher volumes. New York hold was 9.2% in the week to June 21 and 12.1% the following week, for a combined 10.6%.
What we’re reading
World Cup goals spree by star players proves costly for gambling companies, in the FT. Performance of top strikers and victories for popular teams have cost DraftKings as much as $50m.
What are the rules on insider betting, really? In FT Alphaville. “The first thing to understand is that, unlike the financial authorities, the BHA [British Horseracing Authority] treats long and short positions very differently. This is for the pretty obvious reason that it’s a lot easier to make a horse run slower than it is to make it run faster. So the BHA is very strict indeed when it comes to ‘lay bets’ (the equivalent of shorting a horse on a betting exchange).”
What we’re watching: Why Wall Street’s Biggest Traders Are Abandoning Crypto for Prediction Markets, on The Defiant pod.
People are betting on wildfires. Should they? In High Country News. “One major concern stemming from wildfire prediction markets is arson. ‘That’s what has me nervous,’ [Pacific Palisades resident Susan] Sherman said. Theoretically, making a bet could give someone the perverse incentive to start a fire, or help one grow.”
The secret to fundraising, as discussed by Davis Catlin from Discerning Capital on LinkedIn.
Upcoming earnings
Jul 17: Evolution, Betsson
Jul 21: Hacksaw Gaming
Jul 22: Kambi
Jul 29: Churchill Downs (earnings)
Jul 30: Churchill Downs (call)
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