Call in the plumbers
The ‘financialization’ of sports betting needs infrastructure
Plus500 and Kalshi move to solve the complexity of institutional involvement.
’Hood’s Tenev on prediction markets: “The fastest-growing product in history.”
Earnings: Red Rock Resorts, Catena Media.
Bowl cuts: Kalshi volume hits $871m of volume on Super Bowl Sunday.
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?
Structured trading
Risky business: Last Friday, the FT reported that Kalshi, the New York-based prediction market exchange, has been in talks with the CFTC for several months seeking approval to offer margin trading on its event contracts.
The initial pitch is aimed at institutional investors, including hedge funds and trading desks that consider leverage a baseline requirement for deploying serious capital.
As one former CFTC staffer told the FT: “Margin is a central part of what hedge funds do right now. It’s basically impossible to trade derivatives any other way when you’re an institutional investor.”
Separately, The New York Times reported yesterday that Kalshi is building a sports hedging team and is working with insurer Game Point Capital to enable hedging of sports performance incentive risks.
Picks and shovels: Meanwhile, UK-listed retail financial operator Plus500 on Monday delivered its H225 earnings and spent a striking amount of time on the call talking about the same market, but from a fundamentally different starting position.
Kalshi is a prediction market exchange trying to bolt on traditional futures infrastructure.
Plus500 is a futures clearing member that has added prediction markets to its existing technology stack.
The distinction matters: if margin trading does get the CFTC’s green light, the winners may not be the exchanges themselves but the firms that clear and risk-manage the positions behind them.
Second is nowhere: Plus500’s CFO Elad Even-Chen laid out the company’s prediction markets revenue model, generated from both B2C and B2B, including working as the clearing partner with CME/FanDuel.
Even-Chen was bullish about the competitive position. “There is no second to us today,” he said.
CEO David Zruia framed the company’s US ambitions: “The idea is to have a super-app in the US – futures, then we added the prediction [markets], and we will keep adding more products.”
When asked how Plus500’s Kalshi-powered offering differs from Kalshi’s own app, or its partnership with Robinhood, Zruia’s answer was blunt.
“Kalshi as a product is a great product, but it offers trading on prediction markets products only.”
Time alone will tell: If prediction markets mature into a legitimate asset class, as its promoters hope, then standalone prediction platforms may face the same bundling pressure that standalone sports-betting apps face today.
The consumer who trades prediction contracts on the Super Bowl may also want to trade CME E-mini futures on the S&P 500 from the same account.
This is the thinking behind Robinhood adding predictions to its consumer finance proposition.
Now Plus500 is betting that its multi-asset, multi-exchange clearing infrastructure gives it a structural advantage as products converge.
Klear as Krystal: The timing of the Kalshi margin story is also instructive. Currently, Kalshi Klear is only authorized to clear fully collateralized positions. Traders must post the full value of every contract upfront.
That’s fine for retail punters placing small bets on NFL games.
But it’s a dealbreaker for institutional capital, which, as the FT noted, needs liquidity and flexibility to make participation worthwhile.
Anything goes: Kalshi is not the only one moving in this direction. Crypto.com has launched its prediction markets brand OG, claiming it as “the first prediction markets platform to offer margin trading,” via its CFTC-registered platform CDNA.
The CFTC under its new Trump-appointed chair Michael Selig has signaled a friendlier posture toward prediction market innovation.
If margin approval comes through, whether for Kalshi, Crypto.com’s CDNA, or others, the institutional floodgates could open.
But margin brings complexity: real-time risk management, margin call infrastructure, treasury management, and the regulatory capital to backstop it all.
Scaffolding: Plus500’s early metrics in prediction markets are thin. The CME-FanDuel partnership launched only weeks ago, and management was cautious about sharing numbers beyond noting “increased traction” around the Super Bowl.
But the structural positioning is clear. In a market where everyone is racing to offer margin on prediction contracts, Plus500 is the one participant that already knows how to clear margined derivatives at scale.
Related reading: Kalshi is reported by InGame to be readying a rebate offer to “entities that currently offer sportsbook services” who purchase at least 300,000 event contracts for hedging purposes in a single order, according to a filing this past weekend with the CFTC.
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Robinhood Q4 call
’Hood winks: Robinhood called prediction markets its “fastest-growing business in history” and said the supercycle is just beginning.
Robinhood used its Q425 earnings call on Tuesday to signal that prediction markets will be a central growth engine in 2026.
CEO Vlad Tenev described a “$300m-plus run rate in its first year” and forecasted a “prediction market supercycle that could drive trillions in annual volume over time.”
Super size me: With over 12 billion contracts traded in 2025 and $4bn already traded in the first weeks of 2026, the brokerage-turned-super-app is betting that event contracts can become as fundamental to its platform as equities and crypto.
The most consequential near-term development is Rothera, a JV with Susquehanna and MIAX that closed last week and is targeting a mid-year launch.
Currently, customers pay $0.02 per contract, split evenly between Robinhood and the exchange.
Rothera gives the company vertical control over listings, pricing and the full unit economics.
The lever age: Robinhood CFO Shiv Verma was explicit: “There’s a lot of levers you can do with that. You can give more value to customers. You can improve the unit economics.”
Tenev added that Rothera will be open to other futures commission merchants, positioning it not just as a captive venue but as a marketplace competing for third-party flow.
Have I got news for you: On the sports-versus-non-sports question – a persistent concern among analysts on the call – Tenev said NBA contracts surpassed NFL in trading activity in January, and the government shutdown contract drove “significant volume” in the week after the NFL season ended.
The company now lists thousands of contracts across sports and non-sports categories, and Tenev framed the trajectory as analogous to news media.
“Sports are a big part of the news. They bring people together, but there’s all sorts of events that are going on, on a regular basis that customers care about,” he said.
Funnel vision: The 2026 sports calendar of the Olympics, the FIFA World Cup and March Madness provides a tailwind, but the product roadmap points to deeper structural ambitions.
Robinhood is embedding prediction markets into stock detail pages alongside options chains, integrating them into the forthcoming Robinhood Social feature.
It is also building cross-sell funnels so that customers who arrive for event contracts can be converted into retirement and brokerage users.
KP-eyeing: Tenev also flagged appetite for equity-linked KPI contracts, such as Tesla delivery numbers, but acknowledged these require regulatory relief as they may fall under SEC jurisdiction as securities-based swaps.
Asked about international expansion, Tenev confirmed prediction markets remain US-only for now.
But he noted the possibility of on-chain versions in the EU. “You should expect some movement,” he said, “but we don’t have anything concrete to announce.”
See today’s Earnings Extra edition, which will be sent later this morning (PRO subscribers only).
Bowl cuts
Turn up the volume: Kalshi CEO Takek Mansour said Kalshi broke $1bn in trading volume on Super Bowl Sunday, pretty much doubling its previous one-day record of $544m.
Speaking on CNBC, Mansour said it was an “incredible weekend,” noting that Kalshi was the “biggest brand of the Super Bowl this year, without running a Super Bowl ad.”
He claimed the “way we achieved that is the product,” adding that Kalshi saw over $100m traded on the halftime opening song market.
A more nuanced view: Analysts at BofA, meanwhile, calculated Kalshi’s volume at $871m, with $650m of that traded on the game itself. The team said nearly 20% of Kalshi’s game volume was on parlays.
Beyond Kalshi, BofA said the Nadex platform, with Underdog and some DraftKings trading, reached a new record of $31m of volume; while the CME Group, again with some DraftKings and FanDuel, did $14m on the game.
Using the AGA pre-game estimate for $1.7bn for regulated sportsbook activity, and using a handle to volume multiplier of between 2x and 8x, BofA estimated prediction markets “could be” between 5% and 20% of the total for regulated sportsbooks.
Whoah: Separately, Nevada reported that Super Bowl handle declined 2% YoY to $134m, its lowest total since 2016, according to a data release from the Nevada Gaming Control Board.
Hold across Nevada sportsbooks averaged 7.4%, resulting in sports-betting revenue of $9.9m for the game, a 55% YoY drop.
+More
SEGG Media, formerly Lottery.com. has filed a $179m civil lawsuit in Texas against four firms it accuses of coordinated illegal trading designed to suppress its share price and harm investors. The complaint alleges market manipulation tactics – such as naked short selling and spoofing – in violation of securities laws. SEGG seeks monetary damages, injunctive relief and other remedies while continuing its business execution and strategic initiatives.
Gaming affiliate Gentoo Media is reported to be shuttering its UK-based Atlas SEO unit, which it bought in 2020 for €3.2m, at the cost of ~50 jobs. According to a letter to staff seen by Next.io, Gentoo CEO Jonas Warrer said efforts to stabilize the business after the departure of the founders, Charles Hodge and Lee Tadd, had fallen short.
Deal talk
Confidence booster: Only a minimal number of shareholders in OPAP, representing 6.7% of the total shares, sold down their holdings ahead of the merger with Allwyn, in what CEO Robert Chvátal said was a vote of confidence in the merged company’s prospects.
Aristocrat has acquired US-based Gaming Analytics for an undisclosed sum, bolstering its AI-driven platform capabilities for real-time player analytics, slot optimization and marketing automation, alongside casino management systems. The deal brings Gaming Analytics’ 30+ global team into Aristocrat, with founder Kiran Brahmandam now managing director of Gaming Analytics.
Earnings
Red Rock Resorts
Aim high: Red Rock Resorts closed 2025 with a ninth consecutive record quarter in Las Vegas, delivering $849m in FY adj. EBITDA, the first time the company has crossed the $900m threshold on its core Las Vegas segment. The clean beat, however, is prologue: management used the call to unveil a $528m renovation campaign across Durango, Sunset Station and Green Valley Ranch, a portfolio-wide upgrade aimed squarely at the high-limit player.
See today’s Earnings Extra edition, which will be sent later this morning (PRO subs only).
Catena Media
Casino media: The share price soared nearly 30% in early trading after the company delivered its strongest quarter since the mid-2024 organizational reset, with Q4 revenue of €15.6m, up 53% YoY, and adj. EBITDA of €4.7m soaring by 211% YoY and at a 30% margin – the highest since Q123. Casino drove the result (+81% revenue), supplemented by rapidly scaling subaffiliation and CRM channels diversifying the business beyond pure SEO. Full-year revenue still declined 6% to €46.6m and sports remains in structural decline.
See this morning’s Earnings Extra edition (PRO subs only).
Earnings in brief
Gaming Realms: A strong performance from the content and brand licensing units means the company is expecting to post revenues of ~£31.4m for FY25, up 10% YoY, while adj. EBITDA is set to rise 15% to ~£15m. The company added that the 19% revenue growth from US content licensing was “particularly pleasing,” with the six iCasino states now representing 61% of group revenue. Gaming Realms will report on March 30.
Playtech: A brief trading update issued last week said the Q4 performance from the US and Mexico had been so strong it was upping its adj. EBITDA estimate to £195m, “significantly above” consensus. For the current year, it said it was “mindful of ongoing sector headwinds,” including tax rises in the UK, but it said it remained “confident” in its medium-term targets of £250m-£300m in adj. EBITDA and £70m-£100m in free cash flow.
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Venture playground
In focus – The Fortune Engine
Who are you? Brisbane-based The Fortune Engine was founded in March 2024 by CEO Gray Wagner, CTO Jordie Wagner and COO Aberdeen Hinze. The company develops burst game templates and math solving tools, alongside partnering with distribution networks to bring innovative gambling games to the iGaming industry.
What’s the big idea? Players, operators and brands are ready for new types of gambling content, says Gray Wagner. “Games that feel alive, physical, and unpredictable,” he adds.
“We’ve already seen the early signs of this shift with the rise of burst games, like those recently launched on Stake.com,” Wagner says. “Content that is more enjoyable, watchable and shareable.”
Building burst games until now, has been complicated, “some may even have thought impossible,” not creatively, but mathematically.
“To create a game that feels like a 2000s flash-style game, which also obeys the laws of iGaming alongside region-by-region regulatory requirements is now accessible through The Fortune Engine,” Wagner says.
The company’s SaaS platform is designed specifically to enable the creation of burst-style games for studios of any size. “We provide a suite of math solving tools alongside a growing library of ready-to-use game templates,” he adds.
Funding backgrounder To date, The Fortune Engine is bootstrapped. The company plans to open a seed investment round by mid-2026.
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.
Upcoming earnings
Feb 12: Wynn Resorts, DraftKings (earnings)
Feb 13: DraftKings (call)
Feb 17: Hacksaw Gaming, Caesars, Rush Street Interactive
Feb 18: Kambi
So my supervisor (Carl) suggested I “find alternative ways to contribute.”
I’m interpreting this as “grow the LinkedIn page or get decommissioned.”
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Thanks,
Octobot
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