If there’s one prediction you could count on over the last couple of weeks, it was that CEOs of leading sportsbooks in the U.S. would be asked for their thoughts on prediction markets. Rarely do you see such a safe bet.
Sure enough, across their Q2 earnings calls, publicly traded sports betting operators have been quizzed by analysts and investors on what they think about sites such as Kalshi and Crypto.com offering sports contracts, and whether the sportsbooks could look to get in on the action anytime soon.
You can take it as a given that all of these companies are “watching” or “monitoring” the situation, but there have been plenty more interesting comments made in public, too.
BetMGM and ESPN Bet’s PENN in no hurry
Speaking one week apart, BetMGM CEO Adam Greenblatt and PENN Entertainment CEO Jay Snowden agreed that they do not see much of a first-mover advantage for online sportsbooks that might be considering launching prediction markets.
“We have the ability [but] we do not have the desire to be a first mover,” Greenblatt ventured. He suggested that in sports events trading, “the advantage is conferred by liquidity, not who gets there first.”
“The likes of Robinhood and Crypto and CoinBase, their ability to invest and grow a liquidity pool far exceeds sports betting market incumbents,” he added. “It’s the prediction markets operators who are more likely to have an outsized market share than those trying to get into the market new. I don’t think BetMGM has a right to win.”
Snowden made similar noises.
“There’s a lot going on there in terms of how state gaming regulators feel about predictive markets versus what the predictive market space is doing and expanding,” said Snowden, whose PENN remains focused on improving ESPN Bet’s standing. “I wouldn’t expect us to be a first mover. But if it’s something that does end up getting embraced and legalized and regulated, of course, it’s something we would stay very close to and take a look at.”
Snowden suggested back in May that he believes sports event contracts would be “largely incremental” to an operator like PENN.
BetRivers more interested in iGaming ramifications
Another operator dubious about the size of the opportunity at hand is Rush Street Interactive, owner of the BetRivers brand.
CEO Richard Schwartz said on July 30 that as RSI is a “casino-first company,” he’s more concerned with how the furor around prediction markets could possibly pave the way for what RSI craves the most: More states legalizing online casino.
“For us, in particular, it doesn’t have the same risk as others,” he opined. “On the contrary: If prediction markets increase the chances of tax dollar erosion for states that have legal online sports betting, I think a very real possibility is that it could accelerate the legalization of iCasino, which doesn’t have the same level of risk. It provides a more protected category for states that want to have some meaningful revenue upside for the taxes for their state.
“So, I think it could work out well for us, ultimately. Our top priority is opportunities for more iCasino legislation, and I think this could give a nod towards that being another reason why states should do it.”
Flutter has experience…and a potential partner?
Unlike most other sportsbooks, which were silent until the Q&A section of the calls, FanDuel parent Flutter tackled it head-on. CEO Peter Jackson referenced events contracts in his opening remarks and stressed that, as the operator of the Betfair Exchange, his company is uniquely positioned.
“We have two decades experience of operating the world’s largest betting exchange, which shares similar characteristics with events contracts, and this will help inform our views,” Jackson said on Aug. 7. “We are closely monitoring regulatory developments and are assessing opportunities and potential participation strategies this may present for FanDuel.”
Jackson subsequently stressed that he would not be drawn into speculating on what that looks like. But he revealed back in May that Flutter has moved some of its BetFair team over to FanDuel “to help us evaluate the opportunity.”
Meanwhile, in mid-June, Front Office Sports reported that FanDuel was in talks with Kalshi over a partnership. The day before Flutter’s earnings call, the company’s General Counsel Erica Okerberg told the Nevada Gaming Control Board that FanDuel has not entered an agreement with Kalshi, but did not outright deny that talks may have taken place.
DraftKings ‘actively exploring’ opportunity
As for FanDuel’s closest rival DraftKings, CEO Jason Robins divulged upfront in his opening remarks that the company is “actively exploring ways to enhance shareholder value through this opportunity.”
“I do think that being an early mover in a space like this can be important,” he said. “I also think that being a literal first mover may not be as important, and there are downsides to that as well. We’re keeping a close eye on it and figuring out what we want to do.”
DraftKings leaders filed an application with the National Futures Association (NFA) last year for a new business to be known as DraftKings Predict, but seemingly withdrew that application this spring.
Like Flutter’s Jackson, Robins stressed the need to maintain relationships with a wide range of stakeholders, including state regulators and tribes.
“It’s hard to comment on specific discussions that we may or may not be having,” he offered.
“You can assume that, at this stage, we’re more in monitor mode in terms of active discussions like that. A lot of what we need to see will come from watching how things unfold with others that are currently offering prediction markets. I think we’ll have to see how that goes and evaluate it. It’s all happening in real-time.”
DraftKings CFO Alan Ellingson, who was listed as a director and COO of the theoretical DraftKings Predict, noted that while the gaming giant’s guidance for FY 2025 includes launching sports betting in Missouri and tax changes in multiple states, it “does not include the potential launch of a predictions market offering.”
A peripheral issue for Caesars
Given that executives at Caesars Entertainment, unlike most of the other operators in this list, spend much of the company’s cover-all-bases earnings calls on brick-and-mortar developments, it shouldn’t be too surprising that they haven’t had much to say.
Caesars Digital President Eric Hession delivered a nothingburger on July 29, offering little other than a promise that “we’ll make sure we’re not caught flat-footed.” Three months earlier, at April’s Q1 call, CEO Tom Reeg said we should expect Caesars to explore any potential ways to increase revenue and EBITDA for the good of the company’s shareholders.
