Macquarie Gambling Stocks: Bullish on Growth and Prediction Markets

Macquarie Gambling Stocks: Bullish on Growth and Prediction Markets

Macquarie, one of Australia’s largest banks, released an October 7 preview note ahead of the third-quarter earnings season. The note signals optimism for US online betting and iGaming operators, despite a 12% slide in gambling shares over the past month. The decline followed a 1% drop in wagered volume in August, a rebound from July’s World Cup-driven spike.

The bank’s analysts—Chad Beynon, Aaron Lee, and Sam Ghafir—highlighted data from the Global Gaming Expo (G2E) in Las Vegas. Meetings with operators and publicly available metrics suggest the sector remains resilient. The analysts expect Q3 commentary to be cautiously optimistic, potentially serving as a positive catalyst.

Targeted Stocks and Adjusted Targets

Macquarie’s research singles out Flutter, Genius Sports, and Sportradar as the most attractive online gaming stocks. However, the bank lowered its price target for Flutter from $150 to $128 and for DraftKings from $38 to $34. The cuts reflect concerns over regulatory pressure and capital requirements that could tighten liquidity.

Prediction Markets on a Growth Trajectory

In a separate July analysis, Macquarie praised the prediction market sector. Beynon projected that prediction-market volume could reach $1.5 trillion by the end of the decade. The bank links the surge to the start of NFL and college football seasons, building on the FIFA World Cup boost.

Prediction-market taker volume is forecast to hit roughly $19 billion in September, a year-on-year increase of just over 1%. In the first week of September, volume reached $4.3 billion despite no NFL games. On opening NFL Sunday, a daily record of $802 million was logged. Kalshi is expected to account for roughly 70% of the market in September.

Liquidity and Incentive Dynamics

The sector’s liquidity hinges on fee income from volume. Prediction-market platforms must attract sufficient takers to sustain revenue streams. Operators face a delicate balance: higher leverage can amplify gains but also magnifies losses if regulatory crackdowns tighten capital buffers.

Macquarie’s downgrade of Flutter and DraftKings underscores the risk that tighter capital requirements could erode profitability. Operators may need to adjust incentive structures, such as offering higher odds or promotional credits, to maintain user engagement amid competitive pressure.

Regulatory Headwinds

Regulators in the United States and abroad are tightening oversight of both online betting and prediction markets. The recent scrutiny of Kalshi by state authorities illustrates the potential for legal challenges. Operators that rely heavily on a single platform risk exposure if that platform faces enforcement actions.

The bank’s analysis implies that operators must diversify their market exposure and strengthen compliance frameworks to avoid sudden liquidity shocks.

What to Watch

• Q3 earnings reports from major US iGaming operators.
• Regulatory developments affecting Kalshi and other prediction-market platforms.
• Changes in capital requirement frameworks that could impact operator leverage.

Macquarie’s bullish stance is tempered by price target cuts and a cautious outlook for Q3. Operators and investors should monitor liquidity trends and regulatory signals closely.

For deeper insight into how operators manage rapid market entry, see the analysis on Data.Bet Africa expansion.

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