Jefferies analysts bullish on online sports betting after G2E
Looking back on the recently completed Global Gaming Expo, analysts for Jefferies Equity Research saw “long-term upside opportunities,” particularly for online sports betting. Their findings were summarized by James Wheatcroft in a 5 October investor note.
Complicating the picture were the Brazilian iGaming and OSB ban, and “regulatory noise” regarding prediction markets in the United States. Of the former, it was said that the Brazilian government’s sudden action “undermines confidence and will likely pressure valuation multiples across gaming.”
iGaming opportunity was espied in the US, especially once the midterm elections are done. Diminished funding from the federal government was named as the motivation.
Regarding any threat to OSB from prediction markets, Wheatcroft found operators to be of generally one mind that “OSB product remains structurally superior to that of prediction markets, with greater breadth/depth of offerings and an unmatched capability to re-engage consumers through generosity.”
On the ascent were sportsbooks powered by artificial intelligence. Kambi was singled out for its AI trading division, “enabling richer bet combinations and significantly increased trader productivity,” according to Wheatcroft.
Increased personalization of the OSB marketing push also was cited as a coming thing. Wheatcroft enumerated “proprietary content, targeted promotions, community features, exclusive games, and real-time engagement tools.” Rush Street Interactive, in particular, was considered a leader in this field.
iGaming was seen to be improving the flow of terrestrial slot-machine content into online form. Nor was this confined to Internet casinos, as charitable gambling and historical horse racing were regarded as beneficiaries as well.
DraftKings was quoted as continued to be solid in its central operations. However, Wheatcroft said it was “clouded by uncertain outcomes in prediction markets with investors continuing to question volatility management and regulatory positioning.”
Executives at DraftKings believed they had strong NFL handle, good enough to resemble 2025’s 16.2% hold. More in-play betting was thought to bolster those numbers by “increasing the number of betting events, while prediction markets currently exhibit lower volatility due to simpler products but could eventually approach sportsbook-like volatility as offerings expand.”
Speaking of prediction markets, DraftKings execs did not see cannibalization as a problem. They told Wheatcroft event contracts were a “potential catalyst for either broader legalization or more favorable tax frameworks.” Regardless of whether it was offering a prediction-market product or conventional OSB, DraftKings said it geofenced when asked to, positioning itself as a good corporate citizen.
Even so, the DraftKings prediction-market product was said to be progressing as anticipated, with positive spending patterns by consumers. Another area of emphasis was iGaming, where Lightning Link was leading a focus on exclusive content. Management said it would be stressing its iGaming offerings more in the near future.
An increase in promotions by Flutter Entertainment subsidiary FanDuel was viewed as picking up momentum for NFL wagering. This acceleration was expected to continue through the balance of 2026 and all of 2027.
CEO Peter Jackson told Wheatcroft that marketing was ramping up for FanDuel predictions. The event-contract product was said by Jackson to be comparable to rival ones, especially after Flutter’s teaming with Crypto.com.
iGaming was the primary point of emphasis for Rush Street Interactive executives. They stressed that it comprised 40% of their Latin American business and 80% of their North American traffic.
For RSI, iGaming was growing at greater speed than OSB. Wheatcroft reported that “the company continues to differentiate through product features, personalized engagement, community functionality, and proprietary content rather than competing solely on promotional intensity.”
Except for Michigan, RSI saw summer growth in all US markets, including New Jersey. A soft August was brushed off as the result of seasonality and an unfavorable calendar.
The US was described as a growth opportunity, especially for a brand as low-profile as RSI’s. Company executives also said there was “no evidence of heightened competitive spending despite peer commentary.”
Another cause for optimism was Mexico, where competition was perceived as easier than in the US. Management at RSI hoped to announce a new Latin American territory soon, along with a resumed Brazilian market.
Prediction-market growth was seen as “building legal credibility” for the controversial offerings. That was according to Sportradar Chief Financial Officer Craig Felenstein and Senior Vice President of Investor Relations Jim Bombassei.
The duo said prediction markets have allure as “most infrastructure is already in place, requiring limited incremental investment, while market makers represent a potential next growth avenue with distinct data needs from traditional operator,” according to Wheatcroft.
Felenstein and Bombassei noted that Sportradar hadn’t been told by any US states to stop dealing with prediction markets. They added “that gray-market revenue remains in the low-to-mid single-digit percentage of total revenue, with enforcement actions typically related to the unauthorized use of data rather than illegal gaming activity.”
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
G2E optimism comes with a regulatory caveat
Jefferies’ bullish read on online sports betting after the Global Gaming Expo fits a broader pattern in the sector: analysts still see growth, but increasingly through the lens of regulation, tax policy and product mix. The firm’s latest view emphasizes that online sports betting remains structurally stronger than prediction markets, while iGaming offers a longer runway as states and operators seek higher-margin revenue streams.
That optimism is not unqualified. Brazil’s sudden move against iGaming and online sports betting was framed as a warning that political risk can quickly reset assumptions. In the United States, prediction markets have become the main source of regulatory ambiguity. Operators have spent much of 2026 trying to convince investors that event contracts are either incremental, manageable or strategically useful rather than a direct threat to sportsbook economics.
The backdrop is also fiscal. With states facing pressure from lower federal support, industry executives and analysts have repeatedly argued that iGaming legalization could regain momentum after elections. That would favor operators with established casino products, efficient customer acquisition and the ability to cross-sell sports bettors into online casino play.
Rush Street’s iGaming tilt shapes the sector debate
Rush Street Interactive has become a useful case study for Jefferies’ argument that iGaming, not sports betting alone, is driving the next phase of online gambling growth. The company has leaned on online casino play in North America and Latin America, while keeping U.S. sports betting profitable but less central to the growth story.
Jefferies analyst David Katz underscored that point in August when he reiterated confidence in Rush Street Interactive despite a sharp share-price decline. Katz said RSI had beaten Wall Street expectations in 18 of the past 19 quarters and described Latin America and U.S. iGaming as the company’s main engines. He also noted that 70% of RSI’s global customer mix and 80% of its U.S. mix gravitated toward iCasino play.
That customer behavior matters because online casino products typically produce stronger returns than online sports betting. Acquisition costs can be lower, payback can be faster and customers can be monetized more consistently than through seasonal sports calendars. For an operator such as RSI, the ability to move sports bettors into casino products gives it an answer to both promotional pressure and fluctuating hold rates.
Jefferies’ post-G2E view that RSI stands out in personalization also follows from this positioning. Product features, community tools, proprietary content and targeted engagement can reduce reliance on blanket promotions. That is critical in a market where large rivals can outspend smaller brands during football season.
Latin America adds growth and tax risk
RSI’s Latin American exposure has been one reason analysts have assigned it a higher-growth profile than some U.S.-focused peers. Colombia has been especially important. In one earlier assessment, Katz said RSI’s Colombian revenue surged 185% during the second quarter after a value-added tax was suspended by the courts. Mexico and Peru also have contributed to the thesis that RSI can grow faster outside the crowded U.S. sports betting market.
But the Colombian experience also shows why Jefferies’ latest G2E caution on Brazil matters. Tax regimes can change quickly, and online gaming operators have limited ability to offset sudden government action. In January, Jefferies trimmed its cash-flow expectations for RSI after Colombia replaced one levy with another, as detailed in its analysis of how Rush Street shed one tax in Colombia but gained another. The expired VAT created upside, but a new 19% tax on gross gaming revenue reduced the benefit.
Even after that adjustment, Jefferies kept a favorable view on RSI, citing Colombia, the World Cup and solid execution as tailwinds. The episode demonstrated the dual nature of Latin America for online gambling companies: It can deliver fast growth, particularly where digital casino adoption accelerates, but it also brings policy volatility that can compress valuation multiples.
That is why Brazil’s abrupt posture reverberates beyond one country. Investors are not only pricing addressable markets. They are also pricing confidence that licenses, taxes and enforcement rules will remain stable enough to support long-term investment.
World Cup gains test retention assumptions
The World Cup gave RSI a high-profile chance to turn sports betting demand into broader platform growth. During a July earnings call, executives said the tournament helped drive the company’s fastest revenue growth in more than four years. CEO Richard Schwartz described the event as long planned and well received, while management said first-time Latin American customers had a 25% cross-sell rate into iGaming.
That performance, covered in RSI’s discussion of how executives downplayed prediction markets during the earnings call, highlighted the operator’s preferred model. Sports events can draw in customers, but the longer-term value depends on whether they migrate to casino products and remain active after the cultural moment passes.
CFO Kyle Sauers was careful not to overstate retention. He said some players joined specifically for the World Cup and that it was difficult to find a comparable event. Still, management expected the tournament to support future activity, particularly in Latin America. Strong hold added about $10 million to the quarter, giving investors a tangible example of how major events can move results.
The key question is whether such customer-acquisition spikes can be repeated or converted into recurring revenue. Jefferies’ broader G2E thesis suggests operators with stronger personalization and iGaming depth are better positioned to do so. If sports betting remains the entry point and online casino becomes the profit engine, companies with tighter cross-sell loops could outperform.
Prediction markets remain a valuation overhang
Prediction markets have become the central uncertainty for online sports betting investors, but Jefferies has generally argued that the threat is overstated. The firm’s G2E takeaway was that operators still view sportsbooks as superior products because they offer more betting depth, richer promotions and more tools to re-engage customers.
Flutter Entertainment has been the highest-profile example of investor anxiety. Jefferies analyst James Wheatcroft argued in July that the prediction-market threat to Flutter was overrated, saying there had been no material cannibalization of online sports betting revenue. He saw upside from market making, the launch of FanDuel Predicts and regulators’ preference for established sportsbook frameworks.
That argument aligns with comments from other operators. DraftKings has treated event contracts as a potential catalyst for broader legalization or more favorable tax frameworks. Flutter has moved toward participation through FanDuel Predicts and a Crypto.com partnership. RSI, by contrast, has taken a defensive posture, applying for a license so it would not be caught flat-footed but saying it does not plan to lean into a crowded sports prediction market.
The differences reflect each company’s strategic base. Flutter and DraftKings can use scale, pricing models and market-making capacity. RSI’s advantage is more tied to iGaming engagement and Latin American growth. For data suppliers such as Sportradar, prediction markets may create incremental demand because much of the infrastructure already exists and market makers need specialized data.
AI and personalization define the next contest
The next competitive frontier is less about whether online sports betting survives prediction markets and more about how operators improve margins while retaining customers. Jefferies’ G2E review pointed to artificial intelligence, automated trading and deeper personalization as tools that can expand betting options and reduce operating friction.
Kambi’s AI trading division was singled out for enabling richer bet combinations and better trader productivity. For operators, such tools can support more in-play wagering, a larger number of betting events and more tailored offers. That could help sportsbooks defend their product superiority even if prediction markets expand into more sports-like contracts.
At the same time, iGaming content is becoming more important. The migration of land-based slot content online gives operators another lever to extend lifetime value. Exclusive games, targeted promotions and real-time engagement tools are increasingly central to how companies differentiate without relying only on promotions.
The stakes are straightforward. If regulation stabilizes and more U.S. states legalize iGaming, operators with casino depth and strong cross-sell systems could benefit most. If tax shocks spread or prediction markets gain legal traction faster than expected, valuations could remain under pressure. Jefferies’ bullishness rests on the view that the industry’s core products, particularly online casino and mature sportsbooks, still have stronger economics than the alternatives.
