Stampede
Flutter and DraftKings shares hit by predictions momentum
Kalshi and Robinhood trading numbers see investors take fright.
In +More: DraftKings and FanDuel strike media deals.
Puts+Takes: DB warns of prediction parlay threat to DraftKings.
Venture playground: House Advantage provides UA cash to Midnite.
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Wiped
Don’t let the door hit you on the way out: Investors dumped Flutter and DraftKings stock yesterday after evidence from Kalshi and Robinhood highlighted strong consumer appetite for sports-based prediction markets.
Flutter shed more than 10% ($5bn in market cap), while DraftKings plunged 11.5% ($2bn).
Rush Street Interactive dropped 8.5%, with Genius Sports off 8% and Sportradar 6%.
Turn up the volume: The sell-off followed Kalshi’s disclosure of record weekend volumes – $260m on Saturday and $275m on Sunday, both eclipsing its prior $245m high. Cumulative NFL-season trading has now topped $1bn.
Much of that flow came via Robinhood. CEO Vlad Tenev boasted on Monday via a posting on X that the platform has processed 4bn contracts since February, including 2bn in Q3.
Robinhood stock jumped 12% on the day, adding another 5% yesterday.
Analysts at Compass Point estimated Robinhood generated ~$10m in prediction market revenue in Q2, which could increase by 100% QoQ.
Royale with cheese: Bloomberg also reported yesterday that Robinhood is in talks with the UK’s Financial Conduct Authority (FCA) about international expansion. “It’s a swap here in the United States,” said JB Mackenzie, VP of futures and international at Robinhood.
“So the question would be: Where is swap oversight, let’s say in the UK? That’s a question we’ve been asking the FCA – how do we work it?”
Mackenzie and Robinhood may be disappointed. Retail financial trading – including financial spread betting and CFDs – sits with the FCA, but sports spread betting and exchanges, such as Betfair, fall under the remit of the UK Gambling Commission.
Keep the faith: Analysts suggested the bout of selling was an “overreaction.” Jefferies argued that despite Kalshi’s advances on parlays, they “lack the product depth” of online sports-betting offerings.
“Kalshi’s new customizable product resembles the same-game parlay product offered by sportsbooks, albeit with limiting features,” the analysts said.
Texas Capital’s team added that in regulated states prediction market wagering options’ content and functionality “remain thin.”
Blue Monday: Citizens flagged a pattern: OSB leaders routinely slump on Mondays after NFL weekends, regardless of outcomes.
DraftKings has risen only twice on a post-NFL Monday since Week 12 last season; Flutter just four times.
The team suggested there is no clear correlation with weekly margins “but it should continue to be an ongoing theme as long as these companies underperform expected margins.”
Deal chatter: Front Office Sports reported last week that Kalshi and rival Polymarket have both sounded out Novig, the former sports exchange turned sweepstakes operator.
DraftKings has previously been linked with Railbird, while Flutter was said to be exploring a Kalshi tie-up. Neither has materialized.
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+More
Old school: Away from the markets mauling, DraftKings announced a new multi-year advertising agreement with NBCUniversal, which will see exclusive integrations and digital sponsorships across the broadcaster’s top-tier sports properties: NFL, PGA Tour, Ryder Cup, English Premier League, NCAA football and basketball, NBA, WNBA, and more.
Staying with media deals, Flutter has announced a new partnership between FanDuel and Amazon for the provision of official odds, as part of Prime Sports’ new opt-in personalized bet tracking offering for its NBA & WNBA coverage on Prime Video.
Underdog has announced a multi-year partnership with the Kansas City Royals for market access in Missouri, and a range of marketing campaigns and philanthropic efforts. Underdog has a pending sports-betting license application under review by the Missouri Gaming Commission, which if granted will be the company’s second full OSB license.
Bally’s says its debtholders have now consented to the proposed sale and leaseback of the Twin River Lincoln Casino Resort to Gaming & Leisure Properties for cash proceeds of $735m. At the same time, it has unveiled its plan for the old Tropicana site in Las Vegas and has increased its revolving credit facility to $510m.
By the numbers
Macau: GGR climbed 6% YoY in September to $2.27bn but was down 17.5% from the August total due in part to the disruption caused by Super Typhoon Ragasa.
Read ahead
Waking up, smelling coffee: Seemingly, the CFTC has acknowledged the existence of sports-based prediction markets for the first time. As broken by Sportico’s Dan Bernstein on X, a letter from the financial regulator cautions the predictions ecosystem that they should be prepared, according to Andrew Kim on LinkedIn, for the possibility that “state regulatory actions or ongoing or new litigation, including enforcement actions,” may “result in termination of sports-related event contract positions.” See tomorrow’s Compliance+More.
Puts+Takes
On my patch: The team at Deutsche Bank argued that the addition of parlays products to the prediction markets offering of Kalshi – and by extension Robinhood – offers direct competition with the offering of DraftKings and its now mainstay of high-margin parlays.
“We anticipate that this product has the potential, in the long term, to offer more competitive parlay pricing compared to sports-betting operators, given competition from the market makers,” the team said.
“Should the prediction market operators offer a lower-priced parlay product to users, the long-term bull case of increasing structural hold would face significant headwinds.”
Here we go again: Looking ahead to DraftKings’ upcoming Q3 statement, and bearing in mind recent New York data and the past weekend’s NFL games (which were in the punters’ favor), the analysts suggested there is “downside risk” to the consensus EBITDA estimate of ~$52m.
Moreover, DB saw downside risk to consensus 2026 adj. EBITDA of ~$1.38bn compared to their ~$1,26bn forecast.
Similarly, Citizens suggested September ended up being “challenging” on the back of game outcomes and player props across several NFL games.
Not good timing: The team estimated that FanDuel saw an ~$130 EBITDA headwind during the month, resulting in ~$44m of total US EBITDA for the quarter vs. US consensus of $143m. DraftKings should see a slightly worse impact, Citizens argued, with the bad sports results occurring at a time when it leaned into certain promotions and customer acquisition initiatives.
This will likely result in an ~$200m EBITDA headwind during the month and overall negative EBITDA of -$102m for the quarter vs. consensus a positive $51m.
In-depth: See today’s Puts+Takes edition (PRO subscribers only) for more on Deutsche Bank’s reaction, alongside their thoughts on the data suppliers; Citizens also lowers OSB leaders’ forecasts; plus CBRE’s latest analysis of the Las Vegas market.
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Venture playground
Funding news – Midnite
Revolving credit: UK-focused challenger brand Midnite is the subject of a $20m revolving credit facility provided by House Advantage Fund, the specialized user acquisition financing strategy offered by Discerning Capital.
The funding allows for continued growth and investment into user acquisition, with the traditional financial constraints that remain prevalent in the broader gaming industry.
Furthermore, credit financing removes the risk of unnecessary dilution when scaling at speed.
Playing with house money: Nick Wright, CEO at Midnite, said the new cash would allow the company to “triple down” on both performance and brand marketing campaigns, while preserving cash for innovation and expansion.
“The flexibility of the House Advantage structure means we can pursue our long-term strategy with greater conviction and fewer trade-offs,” he added.
The funding initiative was launched in June, and saw Discerning Capital partner with Singapore-based underwriting tech firm PvX to provide funding for betting and gaming operators seeking to scale without diluting equity.
Davis Catlin, managing partner at Discerning Capital, said the growth trajectory of online wagering operators has been “constrained by the limitations of traditional venture capital or credit.”
“By tying capital deployment to actual marketing performance, we unlock sustainable, aggressive scale without forcing operators into unnecessary equity dilution or onerous repayment structures,” he added.
Discerning Capital is also an investor in Midnite and led the company’s $10m funding round, which was announced in April.
In focus – OpenSlots
Who are you? OpenSlots is the brainchild of Daniela Lanzolla and Thomas Smallwood, with the support of the ESA Gaming team.
“OpenSlots is designed to be an equalizer, leveraging AI to lower the barriers of entry for game creators,” says Smallwood.
“At its heart, it is a tool that allows operators and studios the opportunity to produce new titles quickly and cheaply.”
What’s the big idea? Smallwood says there are a “couple of areas” that the company hopes to exploit. “Increasingly operators want control of their own content and we think OpenSlots can empower game creators within the B2C sector to build the products they want,” he says.
He adds that the industry is “unsustainable in its current form” for small studios.
“For those who do not have the budget or are not being supported by bigger players, OpenSlots can give a voice to their creativity,” he says.
“By allowing our technology to embrace AI – not as a magic wand, but as a facilitator – we can democratize the development process, giving an outlet to experienced people, who don’t have the funds to start from scratch.”
KPIs: “Right now this is simple,” Smallwood says. “We are looking at cutting game development times drastically. This means every aspect of the process – art, math, FE development, etc. – is looking to be cut as much as possible without compromising quality.”
“And this will be the root of ongoing KPIs as we see AI evolve in the hands of our talented engineers,” he adds.
Funding backgrounder: OpenSlots is self-funded but is looking for strategic partnerships that can help it develop more rapidly.
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