Balancing quarterly volatility and valuation adjustments
Analysts at Macquarie remain positive on gaming stocks heading into the third quarter results season, despite shares having fallen 12 percent over the past month. According to a preview note issued on October 7, US online betting and iGaming operators are poised for growth, with sports betting revenue projected to rise 6 percent and iGaming revenue expected to climb 18 percent.
Macquarie noted that a strong July aided by the World Cup and an improved September helped offset a weaker August, during which total amounts wagered fell by 1 percent. The financial institution adjusted its forecasts to account for higher prediction market investments at Flutter and DraftKings, alongside slightly lower sportsbook win rates. Despite investor concerns surrounding inflation, fuel prices, and the impact of prediction markets, gaming stocks fell 12 percent over the past month and 22 percent over the quarter, even as median 2026 and 2027 forecast revisions remained flat while valuations compressed.
Macquarie analysts Chad Beynon, Aaron Lee, and Sam Ghafir highlighted that industry fundamentals remain strong, noting that Global Gaming Expo (G2E) meetings and public data confirm industry resilience. Consequently, Macquarie adjusted price targets for Flutter from $150 to $128 and DraftKings from $38 to $34, while designating Flutter, Genius Sports, and Sportradar as top picks in the online sector.
Prediction markets reach record highs
A notable driver in the broader digital landscape is the rapid expansion of prediction markets, with taker volume driving fee income projected to reach approximately $19 billion in September, marking a 1,035 percent year on year increase. Macquarie attributed this surge to the return of the NFL and college football seasons following the football World Cup.
The analysts reported that prediction markets generated $4.3 billion during the opening week of September without any NFL fixtures, before establishing a daily record of $802 million on the opening Sunday of the NFL season. Furthermore, Macquarie estimates that Kalshi will maintain approximately 70 percent of the prediction market share throughout September.
Executive commentary
Sharing their perspective in the preview note, Macquarie analysts Chad Beynon, Aaron Lee, and Sam Ghafir stated:
“We expect 3Q commentary to be cautiously optimistic and view it as a positive catalyst for the group.”
The analysts added:
“G2E meetings and public data confirm our view that the industry remains resilient.”
