Prediction Markets Won’t Hurt Sportsbooks’ Earnings, Macquarie Analyst Says
Prediction Markets Unlikely to Impact Sportsbook Earnings in 2025
According to Chad Beynon, a senior analyst at Macquarie specializing in gaming, lodging, and theaters, prediction market platforms do not pose a significant threat to traditional sportsbook operators. As such, they are not expected to affect sportsbook earnings notably in 2025.
Emerging Prediction Markets Present Challenges but No Major Financial Threat
Beynon acknowledges that prediction markets are gaining momentum, especially in states that have recently legalized sports betting. Players using these prediction platforms may benefit from early advantages, potentially leading sportsbooks to extend promotional offers and face a smaller market share. Despite these challenges, Beynon argues that the negative reaction in the market has been exaggerated.
His observations come amid rising competition, illustrated by Kalshi’s introduction of same-game parlays, which recently caused significant fluctuations in the stock values of major sports betting companies like DraftKings and Flutter, who together experienced a $7 billion loss in market value. While these developments highlight the growing presence of prediction markets, they are not considered a fundamental threat to sportsbooks.
Traffic in Prediction Markets Concentrated in States Without Legal Sports Betting
Beynon points out that much of the activity in prediction markets originates from states such as California and Texas where sports betting remains illegal. Given this, Macquarie has maintained its online gross gaming revenue (GGR) forecasts for the period from 2025 to 2027 without significant changes.
In the near term, the firm expects online GGR to grow by 21% in the third quarter, with online sports betting increasing by 13% and iGaming by 32%. This growth rate is predicted to further accelerate to 34% in the fourth quarter. For land-based casinos, particularly on the Las Vegas Strip, a modest 2% year-over-year rise in GGR is forecasted for the third quarter, attributed partly to easier comparisons from lower baccarat revenues the previous year. However, revenue per available room on the Strip is trending downward by 9%.
Beynon anticipates slight declines in third-quarter results, varying from low to high single digits depending on market conditions and disruptions. The Las Vegas local market might experience delayed negative effects due to a weaker local economy, which has already led to increased marketing and promotional activities in both the Strip and local markets to counterbalance the softness.
