Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Prediction markets analyzed
J. P. Morgan’s Daniel Politzer wrote on September 15 that his firm is “increasingly mixed on the risk/reward for DraftKings and FanDuel (Flutter) expanding into prediction markets. In short, the reward of a larger total addressable market is unchanged, but legal/regulatory risks continue to mount and stakeholder opposition continues to grow (regulators, tribes, leagues). Similarly, we reiterate our base-case expectation that online sports betting operators will take a wait-and-see approach, though given Kalshi trading volumes (in the) NFL season to date, we also don’t think there’s been much/any cannibalization.”
David Katz of Jefferies also noted in a September 11 note that “with initial oral arguments finished in Kalshi vs. New Jersey, press reports and our industry sources suggest that Kalshi appeared to fare more positively, albeit not from all perspectives. As Kalshi continues to operate nationwide despite attempts by state gaming regulators to stop them in their respective states, status quo outcomes legally favor Kalshi. Our view remains that any resolution in legality favors DraftKings/Flutter (FanDuel).”
Las Vegas Strip outlook
Barry Jonas of Truist Securities in a September 15 note wrote that while the Las Vegas Strip has undergone “a soft Vegas summer continuing into October, our first November read suggests modest improvements. This aligns with management commentary pointing to November as a potential Q4 inflection following a Q3 likely similar to Q2. Week-to-week trends are also (mostly) improving likely fueled by the shorter booking windows. That said, we have limited data so far for October/November and trends could change meaningfully week-to-week. As a reminder, our survey should be looked at more so directionally as it only captures one facet of the market. Overall, we could see some Q3 estimate risks, but think trends are mostly priced in while Q4 improvements could benefit the stocks.”
Light & Wonder ratings
Fitch Ratings, in a September 10 note, assigned Light and Wonder International proposed eight-year senior unsecured notes a ‘BB’ rating with a ‘RR4’ Recovery Rating.
“Proceeds of the notes will be used to refinance LNWI’s existing 7% senior unsecured notes due 2028, fully repay its senior secured revolver, and for general corporate purposes.
“LNWI is a subsidiary of Light & Wonder. LNW’s Long-Term Issuer Default Rating (IDR) is ‘BB’ with a Stable Outlook, and its senior secured debt is rated ‘BBB-‘/’RR1’. The ratings reflect no material changes in Fitch-defined EBITDA leverage since our last review.
“LNW’s rating reflects its top three gaming supplier status, conservative leverage profile of about 3.6x, pro forma for the refinancing and the Grover Gaming acquisition, and robust FCF margin. The Stable Outlook reflects Fitch’s expectation that the company will maintain a conservative balance sheet and a disciplined capital allocation strategy.”
Caesars’ outlook promising
David Bain of Texas Capital Securities found much to like regarding Caesar’s prospects in a September 10 note.
While Las Vegas investor sentiment is distinctly low,” Bain wrote, “we believe Caesars’ 3Q25 LV segment is trending near consensus estimates and 4Q25E/1Q26E LV forecasts are overly-conservative. Further, we believe 4Q25E digital estimates are staged for a $100M+ EBITDA result – a potential positive valuation and CY26E digital estimate revision trigger. Along with healthy regional trends, all three primary segments (LV, digital and regionals) should grow year-over-year in 4Q25E and CY26E, in our view.”
