Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Daniel Politzer of J. P. Morgan on September 8 looked at gaming industry stocks prospects:
“August was a rough month for gaming stocks. On average, our gaming coverage fell -7% during the month, materially underperforming the Standard & Poor 500’s +3% and marking the group’s worst August since 2019 (though the Standard & Poor 500 declined 2% that month). Potential explanations include summer doldrums/low liquidity, the Iran conflict dragging, macro/higher rates, and sector uncertainty keeping investors sidelined. As we turn the corner into conference season, we think regionals screen most interesting here (Penn National, Red Rock Resorts, Boyd and Churchill Downs), with stable fundamentals seemingly disconnected from recent underperformance.”
Truist Securities’ Barry Jonas on August 31 looked at Kalshi’s standing in Nevada:
“On (August 28), the 9th Circuit ruled against Kalshi (Private), essentially keeping its sports predictions contracts out of Nevada, and potentially driving more state bans. While the 4th/6th circuits have yet to weigh in, we now have a split court on the topic between the 9th and 3rd (New Jersey) which could lead to a Supreme Court review. We could still be looking at ~10-22 months for some resolution though. Both Buy rated DraftKings/Flutter rallied late Friday on the news, and as we highlighted in our 2026 Outlook, we could see additional upside assuming both can continue to navigate the complex landscape as both OSB and prediction market operators.”
David Katz of Jefferies on September 2 also looked at prediction markets:
“Our analysis of the prediction market value chain suggests that exchanges (dedicated contract markets) are positioned to capture a majority (~65%) of explicit transaction fees. Separately, market makers may generate meaningful economics through bid-ask spread capture, rebates, liquidity incentives and other dependent variables, albeit with considerable volatility and prospective risk. In our example, a market maker that successfully captures a $0.01 spread while effectively managing risk could generate approximately $1.69 of net economics on a $100 trade. We believe the ~35% leakage across the value chain underscores the case for vertically integrated operations. Today, we view Kalshi and Crypto.com as the most integrated with DraftKings, Flutter, and Robinhood among those prioritizing this effort.”
