In 2025, prediction market products are not expected to significantly impact the earnings of traditional sportsbook operators, according to insights from Chad Beynon, a senior gaming, lodging, and theatres analyst at Macquarie. Beynon asserts that prediction markets, while gaining traction, are not directly competitive in a way that would harm the financial outcomes of established sportsbooks.
Beynon’s analysis comes amidst growing momentum for prediction markets, especially in newly regulated states where these platforms are quickly establishing a foothold. These early moves could present challenges for sportsbooks by extending promotional periods and potentially reducing the total addressable market. However, Beynon believes that the current market reaction has been more intense than warranted.
The competitive landscape for sportsbooks is being reshaped as prediction markets steadily gain ground. Notably, Kalshi’s introduction of same-game parlays recently sent shockwaves through the industry, leading to significant declines in the stock value of prominent companies like DraftKings and Flutter, with $7 billion lost. This development underscores Beynon’s argument that while prediction markets won’t overthrow sportsbooks, they demand respect and consideration from industry players.
Interestingly, much of the activity within prediction markets is concentrated in US states where sports betting remains illegal, such as California and Texas. This localization of prediction market traffic is a key factor in Macquarie’s decision to maintain their online gross gaming revenue (GGR) forecasts for 2025 to 2027 with little change.
Looking at growth projections, Macquarie anticipates an increase in online GGR by 21% for Q3, with online sports betting rising by 13% and iGaming surging by 32%. This upward trajectory is expected to accelerate in Q4 with an overall growth rate of 34%. In the realm of land-based operations, the Las Vegas Strip is projected to witness a modest 2% year-over-year growth in GGR for Q3, primarily due to a softer comparison with last year’s baccarat performance. However, a downside is noted in the revenue per available room on the Strip, which is trending down by 9%.
Due to these factors, Beynon predicts that third-quarter performance could see declines ranging from low to high single digits, depending on a variety of factors such as comparable past performance, market disruptions, and tier classifications. For local markets in Las Vegas, a spillover effect from the Strip’s performance might be observed, influenced by a generally softer local economy. This situation has already spurred an increase in promotional activities and marketing efforts across both the Strip and local markets.
While prediction markets present a novel challenge, they also bring about an evolution in the betting landscape. A second viewpoint suggests that the rise of prediction markets could democratize betting options, providing more diversity and potentially attracting a wider audience. Some industry insiders speculate that the unique appeal of prediction markets might lie in their ability to offer betting opportunities on a broader range of events and outcomes, which could eventually carve out a niche alongside traditional sports betting.
Conversely, skeptics argue that the novelty of prediction markets may wane as traditional operators adjust strategies to absorb these new dynamics. Established sportsbooks possess significant resources and brand recognition, which they could leverage to innovate and retain market share. Innovations such as enhanced user experiences, personalized betting options, and integrated platforms might be strategies to counteract the allure of prediction markets.
In conclusion, while prediction markets are emerging as an intriguing alternative within the betting industry, they are not anticipated to disrupt the earnings of traditional sportsbooks significantly in 2025. The ongoing evolution of this sector underscores the ever-changing nature of the gambling industry, prompting both traditional and new market players to adapt and strategize in response to emerging trends and consumer preferences.
