Gaming operators run the gamut on prediction markets during earnings calls
Prediction markets remain controversial and nowhere was this more evident than during first-quarter earnings calls. Gaming executives’ comments spanned the spectrum from opposition to fevered endorsement, with a measure of indifference in between.
BetMGM Chief Executive Adam Greenblatt got the ball rolling on 14 April , when he took to the airwaves to slam event contracts, which he disdained as “new sports betting companies … they call themselves prediction markets.” He accused them of driving up customer-acquisition costs.
However, Greenblatt deemed the spending fever as unsustainable.
“The current climate of hyperspend” would, he said, pass eventually. He denounced the new rivals at length, saying BetMGM stood with 40 state attorneys general and was looking forward to US Supreme Court adjudication of what he considered a states-rights issue.
Greenblatt could even afford to laugh about the competitors, saying, “I don’t control what others choose to spend, underpinning bad investment. We’re controlling the controllable. We’re not assuming that irrational spending continues to become more rational. Long-term, the market is going to come back to us and that’s an exciting moment.”
Greenblatt forecast that prediction-market dynamics would end in “shark-on-shark violence. Most recreational players flow back in time.” Event contracts would be dominated by sharps, he forecast, while casual players would “lose too quickly.”
During its earnings call, Vici Properties professed to be unfazed by the event-contract phenomenon. “We acknowledge the growing but unregulated prediction markets, said Chief Operating Officer John Payne, but reaffirmed the company’s faith in brick-and-mortar gambling venues and their “sticky” customer base.
Rush Street Interactive Chief Executive Richard Schwartz was downright dismissive of prediction markets in his talk with Wall Street stock analysts. Igaming-first was his mantra, saying he’d seen little cannibalization from event contracts. He concluded, “we’re searching for different players and searching for them in different places.”
Striking a similar note with analysts was Kambi Chief Executive Werner Becher. Referencing Schwartz’s comments, he said, “I don’t see it as a big opportunity for us, to be honest. On the other hand, so far we have also seen serial impact on our existing business. It’s an interesting, new type of — I call it still sports betting. Because of this great expansion of the prediction-market guys, in expanding the acquisition costs eventually go up a little bit.”
Caesars Entertainment, in its earnings call, also noted a 1% drop in betting volume and an increase in customer-acquisition costs. Becher mentioned this before resuming. He said he was receiving cautionary notices from regulators and that “it’s no option at all to engage with these companies.”
In the next breath, however, he pivoted. “But it’s definitely a new channel, especially for a younger audience, to get closer to betting, to engage sports fans. So there is some risk on revenues definitely for some of our customers, but it’s also an opportunity to broaden the customer base.”
Caesars execs were more circumspect. Said Chief Executive Tom Reeg, “recall that the bulk of our customer-acquisition costs comes from our Caesars Rewards database. That’s a particular advantage now. We’re not swimming in those same pools that prediction markets are making acquisitions.”
Reeg also observed that Caesars’ promotional intensity online had been one-third to one-half of its peer companies. “That tells me that we have lower acquisition cost and lower churn than our peers,” something he said had been of particular benefit of late.
If other companies were at most hedging their bets on event contracts, Sportradar Chief Executive Carsten Koerl was running toward them with arms wide open. “Prediction markets expand the US TAM by opening up new states, attracting new demographies and enhancing engagement with sports … For Sportradar, this opportunity diversifies our customer base and promotes a shift to live engagement, all of which should drive higher revenue over time,” he said.
Koerl said his company was in talks between prediction markets and a variety of US sports, including Major League Baseball, the Ultimate Fighting Championships, the National Hockey League and Major League Soccer. He added, “while we expect to announce agreements soon, we are being deliberate in our discussions.”
He even teased “enhanced conversations” with the National Basketball Association. The focus of prediction markets, he said, was on what was about to happen immediately, whereas legacy sports betting was result-driven.
“We are working hands-on and very quickly on the best possible product to serve our partners on the prediction markets. Our partners, as you know, can only be online sports betting operators which are switching into this segment,” Koerl said.
The Chief Executive was unconcerned about cannibalization. He said, “I’m glad there is a big population which can now get an opinion on a sports event and monetize this.” Echoing Becher, he said it was basically an extension of the existing market. Koerl also celebrated the fact that event contracts open the betting market to teenagers.
Concluded Koerl, “We see that this additional market access is by far outpacing whatever cannibalization effect is in there. We see it outpacing TAM, we see an expansion opportunity for us and this is something which excites us.”
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
How a niche product became a front-page risk
Prediction markets, once a sideshow in U.S. wagering, have moved into the main arena. That shift set the context for the latest earnings season, where executives weighed in on whether event contracts are a costly distraction, a catalyst for expansion or both. The split views reveal a market feeling its way through a fast-moving regulatory gray zone and a customer-acquisition arms race that is rippling across sports betting and igaming.
Two forces are driving the debate. First, the economics: event-contract operators have poured money into promotions and marketing, forcing traditional sportsbooks to defend share and evaluate whether to participate. Second, the law: state regulators and attorneys general are pressing for clarity while litigation advances toward a potential Supreme Court showdown. That combination explains why public companies are staking out clear positions now, even as the product is still evolving.
In this earnings cycle, the loudest voices came from operators juggling margin pressure, tax hikes and product mix decisions. Their commentary echoed themes raised in prior quarters and by Wall Street analysts who frame prediction markets as both a near-term growth vector and a longer-term legal hazard. The near-term upshot: operators with strong igaming footprints and disciplined acquisition strategies are leaning into their core while keeping event contracts at arm’s length.
BetMGM draws a line, twice
BetMGM has emerged as the clearest counterweight to event contracts, anchoring a narrative of regulatory caution and product focus. In April, the company used its earnings call to argue that prediction markets inflate customer acquisition costs and pose a states-rights challenge, signaling that the operator would prioritize higher-value bettors and rein in marketing in pure OSB states. That stance and the underlying rationale were detailed in BetMGM blasts prediction markets in earnings call, which also outlined how BetMGM expects the spending cycle to normalize and casual customers to drift back to traditional books.
By October, management hardened that view. BetMGM told investors it would not engage with prediction markets, citing explicit warnings from state regulators and the risk of license jeopardy. The firm framed event contracts as operating without the consumer protections, tax regimes and oversight embedded in licensed wagering. It also argued that handle trends showed no material erosion from prediction-market activity, implying the purported threat was overstated. Those arguments and the company’s capital-allocation moves were laid out in BetMGM swears off prediction markets in earnings call.
BetMGM’s position matters beyond its own P&L. Many peers take regulatory cues from the same state agencies, and public boards are reluctant to court compliance risk for an unproven category. The company’s emphasis on premium-mass customers, omnichannel rewards and exclusive igaming content also provides a playbook for weathering any near-term turbulence from new entrants ramping spend.
Legal overhang becomes the investment debate
Wall Street has moved from asking whether event contracts will steal share to how the courts will define them. In an April note, Jefferies’ David Katz called out the category’s “enforcement-light” oversight at the federal level, widely varying state responses and the likelihood that a case reaches the Supreme Court. He highlighted the absence of consumer safeguards, the tax advantage over licensed sportsbooks and the potential for a sharp regulatory snapback if harms emerge. His framework, including scenarios that range from congressional clarification to state-by-state compromises, is summarized in Prediction markets run backlash risk, Jefferies analyst says.
Katz’s takeaway for incumbent sportsbooks was notably pragmatic: the near term could be manageable or even favorable for scale players, and the long term hinges on how event contracts are ultimately classified. If legalized squarely within sports, incumbents’ scale and compliance infrastructure are advantages. If curbed, the competitive threat diminishes. Either outcome argues for caution now and optionality later — a stance that echoes the conservative postures voiced on recent calls.
Igaming’s cushion against taxes and volatility
The macro backdrop has quietly shifted in favor of operators with deeper igaming exposure, offsetting some of the promotional and compliance noise around event contracts. In June, Macquarie’s Chad Beynon reported that igaming stocks were outperforming the broader market and that sector hold was trending high, supporting operator revenue despite mounting tax pressure in multiple states. He also pointed to accelerating handle and especially strong growth in online casino activity, which can soften the blow from higher levies and promotional intensity. Those dynamics and the names best positioned to benefit were detailed in Igaming will outperform this year, Macquarie analyst says.
The implications are clear in operator playbooks. When taxes climb and football results choppy, exclusive casino content and higher structural hold help stabilize cash flow. That bolsters the case for staying disciplined on customer acquisition while the event-contract landscape remains unsettled. It also explains why some operators downplayed cannibalization and suggested that prediction markets were drawing users in non-OSB states more than siphoning core customers in regulated markets.
Rush Street’s measured posture
Rush Street Interactive offered a template for evaluated restraint. Management told investors it is monitoring prediction markets closely but sees limited impact on its sportsbook and little strategic reason to divert from an igaming-first model that delivers superior retention and lifetime value. Technology parity, regulatory clarity and proof that event contracts won’t undermine core casino economics are prerequisites before jumping in. The company’s stance, including how it is navigating tax shifts and preparing for potential Alberta expansion, is outlined in Rush Street will refrain from prediction markets … for now.
Rush Street’s experience underscores the sector’s current reality: event contracts may be an acquisition channel for younger demographics, but for operators that traffic in higher-value casino customers, the risk-reward calculus favors patience. That is especially true while state regulators signal skepticism and while operators can grow through content, product speed and cross-sell rather than costly bonuses.
What to watch next
Two threads will determine where this story lands. The legal track — spanning state lawsuits, federal definitions and potential Supreme Court review — will dictate whether event contracts become a regulated adjunct to sports betting or remain outside the tent with higher political risk. The commercial track — acquisition costs, product innovation and the resilience of premium customers — will show whether incumbent operators can hold share without following prediction-market spend.
For now, the center of gravity is shifting toward operators that can lean on igaming depth and omnichannel loyalty while regulators test the limits of event contracts. If the courts narrow the category or require stronger consumer protections and taxation, the incumbents’ advantage grows. If the opposite happens, the largest platforms still have the tools to compete. Either way, investors are taking their cues from management teams signaling discipline until the rules are clear.
