Jefferies analysts bullish on OSB after G2E
Looking back on Global Gaming Expo 2026, analysts for Jefferies Equity Research saw “long-term upside opportunities,” particularly for online sports betting (OSB). Their findings were summarized by James Wheatcroft in a 5 October investor note.
Complicating the picture were the Brazilian i-gaming 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.”
The 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 sports books powered by artificial intelligence (AI). 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 was also 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.
Overall, 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 felt 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 that event contracts were “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 still 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.
All tod, igaming was the primary point of emphasis for Rush Street Interactive executives. They stressed that it comprised 40% of their Latin American business and fully 80% of their North American traffic.
For RSI, i-gaming 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 hope 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 CFO Craig Felenstein and Senior Vice President of Investor Relations Jim Bombassei.
The duo said prediction markets still 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
Prediction markets became the pressure point
The latest Jefferies readout from Global Gaming Expo 2026 lands after months in which prediction markets moved from a niche regulatory question to a central valuation issue for online sports betting operators. Investors have worried that event contracts could siphon sports wagering handle, blur state regulatory authority and force operators into a market with different economics. Jefferies’ recent work has generally pushed back on the most bearish version of that thesis, arguing that the core sportsbook product remains deeper, more promotional and better suited to retaining recreational bettors.
That view was clearest in Jefferies analyst James Wheatcroft’s July assessment that the prediction-market threat to Flutter was overrated. Wheatcroft argued that prediction markets had not materially cannibalized online sports betting revenue and could instead become incremental to Flutter through market making and FanDuel Predicts. His math suggested potential upside from activity in states where sports betting was not yet legal, provided operators could apply pricing expertise without disrupting their regulated sportsbook base.
The July note also reframed prediction markets as a possible profit center rather than a pure competitive threat. Wheatcroft said online sports betting operators could use their pricing models to make markets on prediction platforms, adding economics where they already had trading capabilities. That thesis foreshadowed the G2E message: the industry is watching prediction markets closely, but large operators believe their traditional sportsbook products still have structural advantages in breadth, live betting, bonuses and customer engagement.
Flutter’s sell-off shaped the debate
Flutter Entertainment had already become a test case for how quickly investor sentiment could sour when prediction markets, handle softness and earnings resets converged. In March, Wheatcroft defended Flutter despite cutting his price target, saying the market had conflated short-term handle declines with a structural threat from prediction markets. He said weak results were more tied to NFL underperformance, customer recycling, the sports calendar and promotional choices than to a permanent loss of customers to event contracts.
That distinction matters for the current Jefferies stance. If handle declines were mostly cyclical or self-inflicted, then operators could respond with better promotions, product changes and marketing. If prediction markets were permanently taking share, the valuation case for online sports betting would be weaker. Wheatcroft’s March note took the former view, saying cannibalization was in the low single digits and that Flutter’s early Missouri performance showed it could still acquire customers effectively even where prediction markets had been prominent.
By July, Jefferies had become more explicit that the market had overcorrected. Flutter shares had been punished heavily, but Wheatcroft said three possible sources of upside were being underappreciated: market making, FanDuel Predicts and a regulatory preference for traditional online sports betting. That same logic helps explain why Jefferies emerged from G2E more constructive on online sports betting. The firm appears to see prediction markets as part of the operating landscape rather than a replacement for the state-regulated sportsbook model.
Rush Street became the igaming counterpoint
Rush Street Interactive has provided a different lens on the same debate. While DraftKings and Flutter draw much of the attention in sports betting and prediction markets, RSI has increasingly been framed by Jefferies as an igaming-led growth story with profitable, less central sports betting operations. That distinction is important because it shows how the sector’s investment case is broadening beyond pure sportsbook handle and into online casino engagement, cross-sell and international markets.
In August, Jefferies analyst David Katz reiterated confidence in Rush Street Interactive after a sharp stock decline, arguing the sell-off created an opportunity. Katz highlighted outsized growth in Latin America and U.S. igaming, while describing U.S. sports betting as flattish but profitable. He said RSI had beaten Wall Street expectations in 18 of the previous 19 quarters and that igaming accounted for 70% of the company’s global customer mix and 80% in the U.S.
That pattern supports the G2E emphasis on online casino as a key driver for operators. Igaming offers different economics than sports betting: more frequent customer interaction, lower acquisition costs in some markets and stronger opportunities for proprietary content. RSI’s experience in Peru, Mexico and Colombia also shows why operators are using sports events such as the World Cup to acquire players who can then be converted into casino users. Jefferies’ broader G2E conclusion that igaming is improving the flow of slot content into online channels fits that strategic shift.
Latin America added growth and tax risk
RSI’s Latin American performance also illustrates the regulatory trade-off now shaping global online gaming. Colombia has been a major growth engine for the company, but shifting taxes have complicated the outlook. In January, Wheatcroft wrote that Rush Street shed one tax in Colombia but gained another, after a value-added tax expired and the country imposed a 19% tax on gross gaming revenue for igaming providers.
The change reduced the expected cash-flow benefit to RSI but did not erase Jefferies’ positive view. Wheatcroft kept a “Buy” rating, saying Colombia, the World Cup and execution remained tailwinds. He expected the removal of the VAT to boost revenue, even if the new GGR tax limited the cash-flow upside. The episode underscored a recurring theme for online gaming: governments may welcome legal operators, but fiscal pressure can quickly translate into higher levies.
That risk is also relevant to the current G2E article’s discussion of Brazil’s sudden igaming and sports betting ban. Colombia’s tax changes were disruptive but manageable within a regulated market. Brazil’s abrupt action was more damaging to confidence because it challenged assumptions about market stability. For investors, the lesson is that regulatory certainty can be as important as market size. Operators may still chase Latin American growth, but valuation multiples will reflect whether governments are seen as predictable partners.
World Cup gains met retention questions
Rush Street’s second-quarter earnings call added more detail on how sports events can feed igaming growth. Executives said the World Cup produced strong results, including a best-ever performance in Colombia and 25% cross-sell into igaming among first-time Latin American customers. The company said strong hold from the tournament added US$10 million to the quarter, while management cautioned it was too early to know how many event-driven customers would stay.
During that call, Rush Street executives downplayed prediction markets. CEO Richard Schwartz said the company had applied to the Commodity Futures Trading Commission for a prediction-market license to avoid being caught flat-footed, not because it planned to lean into a crowded market. CFO Kyle Sauers said he did not see an adverse effect on RSI’s business. Their comments reinforced the Jefferies view that prediction markets are a strategic option and regulatory variable, not yet a core threat to every operator.
The same earnings call also pointed to the importance of capital discipline. RSI ended the quarter with US$340 million in cash and no debt, while authorizing a US$100 million share-repurchase plan. Management said it would invest more in marketing where customer values justified the spend, including Alberta and other markets. That combination of expansion, buybacks and selective marketing helps explain why analysts have treated RSI as a differentiated name in online gaming.
The stakes after G2E
The current Jefferies take from G2E pulls these threads together. Online sports betting is still viewed as attractive, especially if prediction markets remain contained and if states seek new revenue after federal funding declines. Igaming is increasingly central because it can deepen engagement and improve returns on acquired customers. Artificial intelligence, personalization and exclusive content are becoming competitive tools as operators try to move beyond promotional spending alone.
The unresolved issue is regulation. Prediction markets could pressure states to clarify tax and licensing frameworks, but they could also accelerate broader legalization if policymakers prefer regulated sportsbooks. Latin America offers growth, yet Brazil and Colombia show how abruptly rules can change. For DraftKings, Flutter, RSI and suppliers such as Sportradar, the investment case now depends on proving that technology, product depth and regulatory compliance can turn a noisy market into durable earnings growth.
