Never mind the ballots

The future for prediction markets is… unpredictable

Nov 22, 2024

Where next for a product borne out of a tumultuous election?
In +More: Bally’s get shareholder approval for Standard General takeover.
The Swedish gaming and affiliate heritage of new sweeps offering.
The US iCasino landscape, overall, and in Pennsylvania in October.

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All to play for

Out of nowhere: Never has a gambling product enjoyed such a meteoric rise as political prediction markets, from a backwater designed for political junkies and policy wonks to mainstream, headline-grabbing attention in just a few short weeks.

Nailed it: During the presidential election, the markets of Polymarket and Kalshi were regularly highlighted for what they were saying about the likelihood of a Trump victory vs. what the polling suggested was a coin toss.

A month before the vote, no lesser authority than Elon Musk was posting on X that the betting markets were “more accurate than polls, as actual money is on the line.”
Since the election, various op-eds have been penned by the likes of historian Niall Ferguson, polls guru Nate Silver and others, appropriately enough perhaps, arguing the toss over the meaning of the rise of prediction markets.

Own it: Among the prediction market dissenters is Washington DC-based nonprofit financial reform lobby group Better Markets. It complained in a post-election blog that prediction markets are “little more than gambling.”

Taking notes: Perhaps taking their cue from such comments, the rise of prediction markets was raised by analysts during a handful of Q3 earnings calls. DraftKings CEO Jason Robins said it was an “interesting development.”

He added it was “definitely something” the company would look at in advance for the next presidential election and “potentially” something sooner.
Similarly enthused was Charles Gillespie, CEO at Gambling.com, who said on his company’s call with the analysts that he saw a “bright future” for the product.
“I’ve certainly been banging the drum internally about developing those relationships,” he added.

It’s beginning to look a lot like Christmas: Speaking to The Token Word this week, Nigel Eccles, former founder of FanDuel and now CEO at the crypto-based startups BetHog and BetDEX, said he “always knew” Polymarket would be big but questioned “what are the next markets?”

Four more years: He said the presidential prediction markets were “something like the Christmas tree market.”
“You do well according to the calendar,” he added. “You do very well one year in four and then you are trying to find markets in between.”

Nadav Trenter Moser, CRO and founder at Prediction News, said the challenge for prediction markets was to become mainstream, suggesting that “99% of Americans do not know about prediction markets, even after the latest presidential race.”

He noted Robinhood’s entrance into the market was a “great first example for this, leveraging the #1 trading brand in the US and offering prediction markets to its massive audience.”
Similarly, talking about Robinhood’s entry into the prediction space, EKG’s Chris Grove posted on LinkedIn that the company would “absolutely not stop at election betting.”

Curb your enthusiasm: Trenter Moser said he is assuming MAUs at present of ~150k of early adopters “for the entire category,” made up of sports bettors, Robinhood traders and, of course, crypto enthusiasts.

To this, he said, can be added a “new layer of people” who would have been enticed during the "election rush.”
He believes the answer to what are the next markets to entice the latest adopters lies in the categories of economics, crypto, business and entertainment.

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+More

The waiting period required under the Hart-Scott-Rodino Antitrust Act for Apollo’s acquisition of IGT’s gaming and digital businesses and Everi has expired, clearing another hurdle for a deal that is now slated to close in Q325.

Bally’s has received shareholder approval for its acquisition by major shareholder Standard General, which will see it merge with Queen Casino & Entertainment. The deal is expected to close in the first half of next year, pending regulatory approval.

Construction at Wynn Resorts Al Marjan Island project in the United Arab Emirates remains on track, according to the company.

Playtika has completed its acquisition of the mobile gaming company SuperPlay. The company said the deal adds multiple growth catalysts in successful games and a development team.

Lottery courier provider Jackpot has announced a deal with 7-Eleven, the largest convenience store chain in the world, with an initial launch in 600 stores in Ohio and Massachusetts.

Read across

The Scottish play: In more Nigel Eccles-related news, Compliance+More reported yesterday on his and his fellow FanDuel founders’ efforts to up the ante in their fight against the company and its PE backers, accusing them of producing an “invented counter-narrative.”

We’ve only just begun: The Token Word reported on crypto entrepreneur Tim Heath and his comments regarding the implications for the world of crypto from the US presidential election, with Elon Musk wielding “significant influence” and serving as a “voice for the tech community.”

+More careers

The big move: Flutter Entertainment will replace its UK & Ireland CEO Ian Brown with Kevin Harrington as of January. Harrington has been performing the role of CEO of the PokerStars business since August 2023.

At the same time, the UK & Ireland business will now come under the banner of Flutter’s international arm, which is headed up by Daniel Taylor.
Previous to his PokerStars stint, Harrington was CCO for Flutter’s international business.
Brown is leaving after two years in the role. He told the Racing Post he was “proud” that Flutter’s UK brands had taken share in a “challenging market.”

Inspired Entertainment has appointed Sebastian Nogues as its new head of development for Brazil interactive. Nogues was most recently the CEO of Latin American Gaming Affiliates.

Dylan Slaney is stepping down from the post of CEO for Light & Wonder’s iGaming division. On LinkedIn he said the decision was “personal in its purest form.” Slaney was previously exec VP at NYX Gaming, acquired by L&W (then Scientific Games) in January 2018.

LiveScore Group has announced a restructure, which it said will affect 100 roles across multiple of its offices globally including in its London HQ.

Catena Media has appointed Stephen Taylor-Matthews to its board. Taylor-Matthews previously held senior roles at Underdog Fantasy and GoatGaming. He remains an advisor at sports analytics startup GamePLAI.

He replaces Øystein Engebretsen at Catena who has been a member of the board since September 2018.

Roots on show

Viking flagship: The team behind the Legendz sweepstakes offering that launched this week has a variety of familiar names with Scandinavian gaming and gaming affiliate back stories.

Heading up the business, according to the press release, is co-founder Henrik Persson Ekdahl, who was previously the acting CEO at Stockholm-listed affiliate Catena Media.
He is also an investor in early-stage investment firm Optimizer Invest, which was previously invested in Catena as well as GiG (now Gentoo Media).

Legendz in their own lunchtime: A further Gentoo link comes with another co-founder and Legendz chair Mikael Riese Harstad who is also chair at Gentoo. The third co-founder is George Westin, CEO at Hero Gaming,

Legendz managing director is Charlie McMaw, who was previously head of business development at High 5 Games and before that at Bethard.

Si, hablo sueco: Legendz will offer the full range of iCasino products including slots, live casino and table games (in a “safe and responsible manner”), with the platform available in both English and Spanish

In Catena Media’s Q3 earnings call, CEO Manuel Stan said the company had “amplified” its efforts to build its brands and databases ahead of future iCasino state launches in the US via building up a presence in the sweepstakes area.

He added that this would “create a sustainable revenue model independent of new state launches.”
Notably, he said the sweepstakes product offering was designed to “reach new demographics such as the Spanish-speaking segment.”

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Earnings in brief

OPAP: Q3 GGR was up 17% YoY to €566m, a leap the company ascribed to a Tzoker mega lottery during the period and also to increased sports-betting and iCasino activity.

Q3 EBITDA soared by 47% to €213m, which the company said was due in part to the strong topline performance allied to a “significant” decrease in operating expenses.
The Tzoker mega jackpot of €19m was the game’s second biggest in its history and encouraged a 600k uplift in new players during the jackpot period.

Acroud: Troubled gaming affiliate services provider Acroud said it suffered a “challenging” Q3 with revenues down 6% to €9.2m and adj. EBITDA falling 16% YoY to just €815k.

After period close, the company announced it had postponed the interest payment on its SEK225m ($20.3m) senior secured bond.
It also entered into a standstill agreement with larger bondholders in order to give it time to “find and implement” a long-term viable solution.
Last week, chair Kim Mikkelsen resigned from the board.

Analyst takes

iCasino shares: Flutter, Rush Street and Caesars are reckoned to have taken market share in October, according to the team at JMP, who noted total GGR across the iCasino states was up 37%. This follows on from growth rates of 21% and 32% in the two preceding months.

The team suggested the poor sports-betting hold in October may have translated to stronger iCasino cross-sell.

Normalized hold: On the subject of hold, the team at Macquarie said that after three straight weeks of above-average hold they believed margins for Q4 will now have reverted to an average of 9%.

Macau: Suggesting the new era in the gaming enclave can be timed to the beginning of the new 10-year concessions that came into effect on January 1 this year, the team at Jefferies said we are now well into the “new normal” period of Macau 3.0.

The period so far has been characterized by resilience in the face of the pressure caused by a retreating Chinese economy.
The analysts estimated GGR for 2024 will come in at $27.9bn, a 24% YoY increase, helped by a similarly strong percentage increase in visitors.
After that, they expected growth to moderate to ~7%-8% YoY in 2025 assuming “no further deterioration in consumer sentiment” given the recent Chinese authorities’ stimulus measures.

By the numbers

Pennsylvania: Before the market moves on to a more auspicious November, for the ’books at least, the data from October in Pennsylvania once again offered an insight into the damage done by the punter-friendly results earlier in the NFL season.

OSB GGR fell 18% YoY to $56.2m while NGR took a 41% nosedive to $25.4m. This on handle that rose 5% to $812m, meaning hold was down 200 bps to 6.9%.
Notably, promo spending rose 21% YoY to $30.8m, making up 55% of NGR vs. 37% in October 2023.
In iCasino, GGR rose 22% to $189m. Deutsche Bank estimated market shares of 27.5% for FanDuel, 18% for DraftKings and RSI and 15% for BetMGM.

Massachusetts: GGR for October was down 17% to $50.3m from handle that leapt 31% to $748m, implying hold of 6.7%, which was down 390 bps on the prior-year period.

In market share, DraftKings maintained its lead by both handle (52%) and GGR (51%) vs. FanDuel on 29% of handle and 31% of GGR. ESPN Bet achieved 3% of handle and GGR, both flat MoM.

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Earnings calendar

Nov 29: Rivalry
Dec 3: NorthStar Gaming

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