Crowning glory
DraftKings talks up market-making profitability
Company is seizing prediction markets opportunity, says CEO Robins.
In +More: Las Vegas Sands ramps up in Dallas.
Markets: Tabcorp investors taken to the cleaners.
Puts+Takes: Accel looks to get a piece of the pie in Chicago.
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King makers
Carpe diem: Jason Robin, DraftKings’ CEO, said the company is seizing the opportunity afforded by market making in the burgeoning prediction markets space, saying it can be “one of the top two or three market makers in the world, arguably the best.”
Stay humble: “At least on the sports front, I don’t see how anyone is going to be able to match that outside of maybe one or two of our big sportsbook competitors that also have really strong pricing models internally,” he boasted.
It “feels like we can capture a big chunk of that,” he added, saying DraftKings had “a lot of opportunity” to scale the business.
As it is, DraftKings’ market-making unit is “one of our fastest-profitability business lines we’ve ever launched,” he said.
The whole wide world: DraftKings’ enthusiasm for prediction markets is clearly growing, with Robins noting that in terms of TAM the “entire other half of the country is now open to us, and we haven’t even begun to ramp marketing.”
DraftKings will be investing $200m-$300m in its prediction markets product this year.
Robins confirmed that “a lot of that” is marketing spend with some element of product investment.
He also confirmed DraftKings would be launching an exchange in the coming months to complement its predictions efforts.
That’s encouraging: DraftKings’ evident enthusiasm for prediction markets, and market making specifically, contrasts with the more measured comments from rival Flutter on its earnings call the day previously.
Peter Jackson, CEO, noted FanDuel also began market-making services on a “major third-party platform” in April.
“Early indicators have been encouraging,” he added.
I’m so excited: Later, Jackson was slightly more enthusiastic, saying he had “spent some time” with the market-making team. “I’m excited about it,” he added. “I mean it’s great.”
“We’re making money today from offering this capability, particularly focused on combos and leveraging the pricing expertise we have,” he added.
“It’s small scale at the moment and we will launch our own platform in the coming months. We’ll then be able to step up the volumes that we’re doing.”
Post-neoclassical endogenous growth theory: Flutter said it will also be investing a further up to $300m on its FanDuel Predicts product this year. CFO Rob Coldrake described this as an “optionality-driven investment within a defined cost envelope.”
Evolutionary theory: Analysts remain somewhat guarded about prediction markets. In a post-call note on DraftKings, Jefferies said that, contrary to fears in some quarters about declining handle trends, the team believes US sports wagering is “not decelerating, but evolving.”
“DraftKings should remain a leader, in both OSB and (while it lasts) predictions,” the analysts added.
Come at the King: More cagily, Deutsche Bank said that in the longer term prediction markets are “shaping up to be a very competitive space.”
The team believes DraftKings has a brand-name advantage, an embedded user base and can leverage its data and tech.
But they still see “multiple formidable and well-capitalized players, and believe the prediction markets could provide incremental competition to the more economical OSB businesses.”
’Base jump: On the competition point, notably prediction markets also got a mention on Coinbase’s Q1 earnings call late last week. CEO Brian Armsttong said the product was “scaling fast” and had reached $100m in annualized revenue in March, “just two months after launch.”
Unlucky for some: CFO Alesia Haas noted that prediction markets were Coinbase’s “13th product to cross $100m in annualized revenue.”
“We are seeing really nice green shoots from these new products that we rolled out with Everything Exchange,” she added.
E+M PRO
A better bet: DraftKings said it exceeded its own expectations in its “fantastic” Q1 numbers, yet it was the confidence expressed in the prediction markets product that caught the ear, as CEO Jason Robins made clear it will contribute to what the company sees as a “massive” opportunity across the sports product set.
See Friday’s Earnings Extra edition (PRO subscribers only)
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+More
Las Vegas Sands is reportedly hiring casino management system developers and other technical staff in Dallas as the company continues its push for legalized casino gambling in Texas. Job postings reference building casino management infrastructure “from inception to launch.” The hiring activity adds to Sands’ broader Texas strategy, which includes lobbying efforts, political spending and proposed integrated resort developments tied to the Dallas area following the Adelson family’s acquisition of a controlling stake in the Dallas Mavericks.
An OTC-listed company called Winners, which owns predictive sports-analytics firm Moneyline Sports, has announced it is looking to raise up to $5m in order to expand its infrastructure offering. The company said proceeds will support launch, branding and customer-acquisition initiatives around its Mevu platform, which offers trading and execution access for sports, digital assets and equities-related event contracts.
Earnings in brief
Codere Online saw revenue rise 13% YoY to €64.4m, with revenue from Spain rising 16% and Mexico NGR also up 13% amid continued active player growth. Adj. EBITDA hit €6m, more than triple the figure from the prior-year period. FY26 guidance was reiterated with NGR forecast at €235m-$245m and adj. EBITDA of €15m-€20m. Stifel characterized the quarter as a “solid beat.”
Century Casinos: Q1 revenue rose 5% to $137m while adj. EBITDA was up 24% to $24.9m off the back of continued North America strength. However, analysts at Stifel noted there was no update on the ongoing strategic review or around potential non-core divestitures, particularly its Polish casino business, or an outright sale.
The week ahead
Making hay: Commentary from the major affiliates on the opportunities provided by the rise of prediction markets has been somewhat limited. But after Genius Sports’ Mark Locke purred at comparisons with the high marketing spend era of OSB and what that might mean for the company’s recent Legend acquisition, Gambling.com and Catena Media will be afforded the opportunity to add some solid numbers to back up the thesis.
Meanwhile, High Roller Technologies will also be talking predictions and its imminent ROLR brand launch, while DoubleDown Interactive may find itself fending off questions about major shareholder DoubleU Games’ ‘takeunder’ offer.
And in the previews, a look ahead to Super Group and Aristocrat.
See The Week Ahead edition sent to E+M PRO subscribers earlier today.
Markets
Laundromat: Tabcorp saw its share price plummet over 35% late last week after it announced that the Australian financial regulator AUSTRAC has a “number of serious concerns” over the company’s AML and anti-terrorism practices.
In an ASX announcement, Tabcorp said that as a result of a compliance assessment AUSTRAC has commenced an enforcement investigation.
The regulator has advised Tabcorp that its investigation is at an early stage and its “approach will be determined once sufficient evidence has been collected and assessed.”
Brave face: CEO Gillon McLachlan said Tabcorp “understands its risk obligations,” adding that “uplifting” its risk capability has been an “ongoing part of the company’s transformation.”
It’s happening again: Tabcorp has been the subject of AUSTRC proceedings before, having paid a A$45m ($32.6m) fine almost 10 years ago after the regulator found that more than 30 accounts had been opened under false names.
AUSTRAC found that the accounts used fraudulent credit cards to move money for criminals.
The proceedings against Tabcorp aren’t the only action currently underway on the part of AUSTRAC within the gambling sector.
Entain’s Ladbrokes and Neds brands are also currently the subject of civil penalty proceedings.
Through the washer: Tabcorp shareholders pay the price
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Puts+Takes – Accel
Jam nitty gritty: Accel Entertainment’s Q1 earnings could be characterized as delivering jam today and the promise of more fruity preserves to come. The analyst lapped it up, with Buy ratings all round and price targets up to a third higher than current levels.
Accel’s headline numbers were impressive. Revenue of $351.6m grew 8.5% YoY, beating consensus by roughly 3%, while adj. EBITDA of $53.8m edged consensus at $53.6m.
Moreover, stripping out ~$2m of accounting wrinkles and EBITDA growth would have been closer to 13%.
The team at Deutsche Bank noted that underlying margins would have expanded ~55bps YoY on a comparable basis.
A deep dish, sorry, dive: The analysts were particularly bullish on the opportunity that has been presented to Accel by the potential opening up of Chicago to VGT licensing.
The city council’s January budget approval cleared the legislative path for video gaming terminals inside city limits.
On the earnings call, Accel reiterated a potential Q426-Q127 go-live window.
The analysts at CBRE modeled an $897m GGR TAM and $49m long-term EBITDA contribution for Accel.
The team at Texas Capital was more aggressive, sizing a $102.5m annualized run-rate exiting 2027.
That assumes four machines per Chicago venue, vs. the six allowable, a 10-30% market-share range and $180 win-per-day per machine against the ~$158 Accel currently averages elsewhere in Illinois.
Texas Capital argued that Chicago is essentially a free option at current levels.
Accel trades at roughly a 20% EV/EBITDA discount to regional casinos despite better growth visibility and the fact consensus 2027 numbers don’t yet reflect Chicago.
The team at Deutsche Bank noted the stock was at 5.7x, and 5.1x 2026/2027 EBITDA, well below the 7.3x historical average since the SPAC combination.
The ins, the outs: State-level data backs the thesis. Illinois revenue grew 8.3% despite a 2.4% location count decline, with hold-per-day up 8.7%, providing evidence that the portfolio optimization strategy and TITO rollout are doing real work.
Nebraska delivered 57.4% revenue growth, Georgia 43% and Louisiana 12.4%, where Accel flagged tuck-in M&A as a continuing priority.
The company repurchased 1.1m shares for $12m in the quarter, with $151.2m remaining under authorization and net leverage sits at 1.4x, comfortably below the regional gaming peer set.
The analysts believe this leaves room for either deal-making or further buybacks while the Chicago catalyst plays out.
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Upcoming earnings
May 11: Super Group (earnings)
May 12: Brightstar Lottery, Super Group (call), Catena, High Roller, DoubleDown
May 13: Aristocrat
May 14: Gambling.com, Bragg Gaming
May 20: Better Collective (earnings)
May 21: Better Collective (call), GiG Software, CIRSA
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