But is it profitable?

Questions abound over prediction markets profitability

Nov 14, 2025

Flutter echoes DraftKings over the conservatism of predictions plans.
In +More: Prime Sportsbook files for Chapter 11.
Earnings: The major affiliates Better Collective and Gambling.com report.
Adjacencies: UK’s FCA finds fair value failings among CFD providers.

Hard Rock Bet is growing – we know you know! And we want to bring in some more maestros to make beautiful music in our Sportsbook. You need to be among the very best in the industry to be considered for these roles. Are you up to it?

Loss leader

Do you know where you’re going to? FanDuel was the latest company to announce concrete prediction markets plans this week, but for all the hullabaloo of the past few months questions over essential aspects of the prediction markets phenomenon remain as yet unanswered.

Do you get what you’re hoping for? Perhaps the most interesting comment from CEO Peter Jackson on Flutter’s earnings call when speaking about FanDuel Predicts was what he said about the company maintaining a “very disciplined approach.”

“We will be carefully monitoring the CAC to LTV dynamics,” he said.
Investment in the product would continue as long as FanDuel was seeing “great returns and paybacks.”
“We’ll know a lot more in the first couple of quarters next year once we get some traction and see what the LTVs look like,” he added.
Flutter estimates the investment will cost $40m-$50m in incremental EBITDA in Q4 and a further $200m-$300m in 2026.

Conservative with a small c: The Flutter team were echoing the comments of Jason Robins from DraftKings, who a week earlier had similarly spoken about being “measured” in its investment levels in the new product.

He said the company was taking “very conservative views on LTV and a very conservative approach to payback periods.”
He said this was “smart because, one, we don’t have any data and, two, we don’t really know what the future of this product will ultimately look like.”

Into the valley: To get to that point of enlightenment, however, the prediction markets space is tipped to see a wave of investment in customer acquisition, primarily from the early market leaders Polymarket and Kalshi.

Polymarket, whose US re-entry is imminent, has a war chest of $2bn from its recent fund raising with Intercontinental Exchange.
Kalshi itself has $300m from its October raise, with rumors suggesting a further mega fundraise that could more than fill its marketing coffers.
On top of this, Crypto.com and PrizePicks, Truth Social, Gemini (see below) and a host of others will be making their own collective push for customers in the coming months.

Skweeze me, pleeze me: Analyst speculation has suggested that an important manifestation of this competition will be a race to the bottom on fees. Bank of America drew the comparison with the online broker sector in 2018-19 where fees went to zero as competition intensified.

But sources pointed out that even without zero fees, the margins for Kalshi are already very thin.
Citizens, meanwhile, noted earlier this week that Polymarket will be re-opening in the US with fees set at 0.01%.
Kalshi’s average fee through the NFL season has been considerably higher, and the team believes Polymarket will “continue to prioritize volume/liquidity over profit,” implying a “drive” towards pricing compression.
It therefore suggests to them a “higher fee structure, or worse economics” will be in place for the OSB operators compared to Polymarket.

Slim pickings: Notably, to date most of Kalshi’s customer acquisition efforts have come effectively for free via partner Robinhood, which has been marketing its predictions offering to its current base of 27 million funded customers.

But as sources pointed out, its economics as part of that deal will be very slim and, if it is to build its own customer base, it will need to start expending its own customer acquisition costs.
“When it decides it wants to acquire customers, it is going to have to do all the stuff that every other consumer brand does,” the industry source added.

Uber eats: Chris Grove, partner at EKG, suggested that when it comes to pure-play prediction markets the ultimate business model remains unknown but that it is “probably not customer fees alone.”

He said it’s “probably some mix of customer fees, taker fees, other fees, add-on subscription products similar to Robinhood Gold advertising, and cross-sell to a broader portfolio of related products like crypto trading.”
He added that Uber was a “good mental model for conceptualizing how this is likely to evolve.”
“You start with the core service,” he added. “You optimize the monetization of that core service. You identify adjacent services that ride on top of or alongside the rails you’ve built. You charge for access to your audience. And so on.”

Twin set

Coin tossers: Meanwhile, listed crypto trading outfit Gemini Space Station confirmed this week it will launch a prediction markets offering in the coming months, with Cameron Winkelvoss saying the product “reminds us a lot of what Bitcoin felt like in 2012 when we first discovered it.”

“This idea that you can essentially build a market on anything, any kind of event is fascinating and really a boundless opportunity,” he told analysts on the company’s Q3 call.
He noted the company has an application with the CFTC to build a DCM and that once the US government opens back up, the company hopes to “continue pursuing that application and hopefully bring these products to market soon thereafter.”

So my supervisor (Carl) suggested I “find alternative ways to contribute.”
I’m interpreting this as “grow the LinkedIn page or get decommissioned.”

Follow Octoplay at:
https://mt.linkedin.com/company/octoplay-op

Thanks,
Octobot

+More

A New York-based hedge fund called Everbay, which owns a minority stake in Golden Entertainment, has issued letters to the board “expressing concerns” over the take-private deal announced last week. The investors say the price of $2.75 per share is “wholly inadequate.”

The last days of disco: MGM Resorts has completed its $300m remodel at the MGM Grand on the Las Vegas Strip. The redesign is styled around a modern disco-era aesthetic, including upgraded wellness-inspired bathrooms, integrated modern tech and storage solutions, and an additional 111 luxury suites.

Prime Sportsbook has filed for bankruptcy to restructure its operations ,while affirming business will continue uninterrupted across New Jersey, Ohio and Kentucky. Co-founder Joe Brennan stated that room will be made to renegotiate fixed contracts and reduce overheads, as the market has evolved since its launch.

Read across

If I’ve told you once… Former UK Prime Minister Gordon Brown has repeated his call for the government to use the lever of higher gambling taxes in order to fund the abolishing of the two-child benefit cap. Brown said he was “confident” the cap would be addressed by Chancellor Rachel Reeves’s Budget on November 26. In yesterday’s Compliance+More.

Face facts: Meanwhile, the UK parliament’s Treasury Committee has urged Reeves to overhaul the gambling tax system ahead of the Budget, arguing that current rates fail to reflect the differing levels of harm caused by various forms of gambling. From Tuesday’s edition of C+M.

+More careers

The big move: As previously announced when the news of Intralot’s acquisition of the Bally’s Interactive business came out, the company has now officially appointed Bally’s CEO Robeson Reeves as its new CEO. Reeves will succeed Nikolaos Nikolakopoulos, who will now hold the position of president. Chrysostomos Sfatos will serve as COO. Reeves has also been elected to Intralot’s board of directors following the resignation of Konstantinos Farris, the company’s group CTO.

Rank has announced that John Ott will be appointed as new chair with effect from November 17. Ott is currently a senior advisory partner at Bain & Company and will succeed Karen Whitworth, who has served as the interim chair since October. She will resume her role as both senior independent director and audit chair.

RPM Gaming has strengthened its senior executive team with the appointment of industry veteran Conleth Byrne as strategic partnerships director. Xpoint has appointed Shaan Devaraj as CTO. Tanja Bergman will be joining Tequity as head of growth for its enterprise-grade RGS product. Xtremepush has announced the hire of Ciaran Lacey as its new CTO. LeoVegas has strengthened its UK and Ireland division with new hires James Derbyshire, Thomas Burr, Andrew Kerr and Katherine Green-Arnanz. Catalist Sports, the newly established licensed supplier of sports-betting content to the regulated US marketplace, has appointed James Monk as VP and GM.

High Roller Technologies has announced the appointment of Jake Francis as COO, effective immediately. He replaces Emily Micallef who moves into an advisory role. Prior to joining High Roller, Francis served as SVP of Operations for BlueBet, senior director for operations at Penn Entertainment and director of internet gaming compliance at Hard Rock.

Earnings extra

Better Collective

Topic du jour: The rise of prediction markets in the US is clearly a win-win for Better Collective, according to CEO Jesper Søgaard, who told analysts on the gaming affiliate provider’s Q3 call that the company was already involved in attractive business for unnamed prediction providers.

See yesterday’s Earnings Extra edition (PRO subscribers only).

Gambling.com

Coming out of nowhere: Such has been the success of the OpticOdds/OddsJam acquisition that its revenue growth far eclipsed that of Gambling.com’s affiliate marketing business in Q3, prompting CEO Charles Gillespe to hail a business that, he says, through acquisition and “great execution” the company has “built out of nothing.”

See today’s Earnings Extra edition (PRO subscribers only).

Earnings in brief

Bragg Gaming: Q3 revenue of €26.8m was up 2% YoY, with strong growth in the US where revenues rose 86%, and Brazil, which saw an 80% uplift, offsetting a 22% decline in the Netherlands amid regulatory tightening. Adj. EBITDA rose 9% to €4.45m, though net loss widened to €2.3m. The company reiterated FY25 guidance of €106m-€108.5m in revenue and adj. EBITDA of €16.5m-€18.5m.

Scout Gaming: Revenue fell 19% to SEK9.6m ($1m), driven by a 9% drop in B2B to SEK7.7m and a 7% slide in B2C to SEK1.6 m. A SEK1.1m write-down pushed its EBITDA to a loss of SEK3.9m versus a small profit last year.

Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments’ Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.

Connections

Brightstar Lottery has signed a deal to provide its instant ticket games in the Czech Republic through a contract with Allwyn’s Sazka brand. Polymarket and TKO Holdings have reached a multi-year, exclusive official prediction market partner agreement for UFC and Zuffa Boxing.

Playgon Games has signed a binding MOU with Digital Nation Entertainment to co-develop and commercialize the next generation of AI dealer technology for live gaming. Mohegan Gaming has launched online sportsbook offerings in Pennsylvania. Internet Vikings will provide its VMware cloud solution to Together Gaming in Europe.

Yggdrasil is providing its online casino games to MerkurXtip in Serbia under an agreement with Bragg Gaming. Pragmatic Play has expanded its partnership with Argentinian operator BPlay following the launch of new Smart Studio Live Casino titles. Evoplay has expanded its footprint in North America with its official entry into the US lottery market. Abelson Sports has agreed a new partnership deal with Betby to integrate pre-match and selected in-play coverage. Hacksaw Gaming has announced a new partnership with BetNacional in Brazil.

Adjacencies – retail financial trading

Price pointers: The Financial Conduct Authority (FCA) has published a multi-firm review of retail-focused CFD providers, assessing how they comply with the consumer duty’s “price and value” outcome.

The review sampled ~25% of authorised CFD firms and focused on bid/offer spreads, commissions, overnight funding charges, hedged position fees and how firms use fair value assessments (FVAs), target-market definitions and vulnerability considerations.

Among the key findings are that many firms did embed consumer duty thinking but application was “inconsistent.”
The review also found that FVAs were often insufficiently granular, fees and charges required further scrutiny, and target market segmentation and vulnerability oversight were uneven.

Time at the bar: Mark Francis, director of sell-side markets at the FCA, said the consumer duty “raises the bar” for consumer protection across financial services, and CFD providers must meet those standards.

“CFDs are complex, risky products and it is vital that providers act to deliver good outcomes for customers, communicate clearly and provide fair value,” he added.
“It is also important that consumers shop around and ensure they fully understand the investment and its costs.”
The review signals heightened regulatory scrutiny on execution quality, cost transparency and value deliverance, not just pricing.

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