Super Bowl Betting Faces Headwinds as Prediction Markets Gain Share

Remy: Those were some other Anthropic Super Bowl commercials. And speaking of the big game, it is the biggest wagering day of the calendar, but the odds are shifting. We are heading into Super Bowl weekend with projections showing a 2% slide in total legal handle to $1.5 billion USD, while New England and Seattle prepare to face off in a rematch of one of the most dramatic finishes in league history. The off-field story is the lack of the pop culture halo we saw last year, and prediction markets are gaining massive traction, challenging the giants like DraftKings and FanDuel. Super Bowl gaming revenue could fall by as much as 35%, even if margins stay steady, hit by tough hold and weaker handle. Well, joining us live ahead of the weekend here at the New York Stock Exchange to unpack the numbers is Citizens Bank senior equity research analyst of gaming Jordan Bender. Jordan great to have you here. Thank you so much for joining me.

Jordan: Thanks a lot.

Remy: Well, first and foremost, tell me about your forecast as we head into the weekend.

Jordan: Yeah, so this is the big game of the year for, you know, Super Bowl bettors and people watching the Super Bowl. This year could be a little bit different. This could be the first year that we actually see sports betting handle decline for the big game. There's two major buckets to put this into. One: you know, it just doesn't have the headline grabbing players like we saw last year - Travis Kelce Patrick Mahomes - you know Philadelphia Eagles not in this game. Two: more middle market teams. That should drive less people into the big game to be wagering. The other piece is prediction markets. been a huge net headline hitting every single part of the sports betting ecosystem, the fintech ecosystem. And that should cause, we believe handle to be down about 5%. We do have Missouri that just launched. That should help the case a little bit here.

Remy: Yeah. So you brought up a lot of important points. We don't have the celebrity halo like you mentioned compared to last year. Missouri coming in as well. But also when we think about prediction markets we know they've been gaining traction, especially with their presence here at the New York Stock Exchange as well. So when it comes to prediction markets and the new entrants, when we're talking about the fintech names, tell us what the landscape really looks like when you look at the data points.

Jordan: Yeah. You know, right now it just feels like it's the wild, wild West. And anyone and anyone who wants to get in and participate is doing so. You know, at first we saw Kalshi, they started, you know, they really started about a year and a half ago, but really launched in a more meaningful way ahead of the NFL season. Everyone at this point is trying to catch up. We're seeing Coinbase, Robinhood, you know, DraftKings and Fanduel all launching prediction market platforms at this point. So, you know, as we look at it today, we think Kalshi kind of the major driver of some of this cannibalization that we're seeing within the sports betting ecosystem. We actually run estimates that we're showing about 5% of the sports betting handle is being cannibalized by prediction markets at this point. Vast majority of that is coming from Kalshi.But, you know, as we look even past the Super Bowl into March Madness, into this summer and into next NFL season, there's going to be a two dozen platforms that are trying to offer markets on prediction markets, and there's going to be a lot of competition out there.

Remy: Yeah. And since we're counting down to Super Bowl weekend here in the U.S., I do want to zoom in on that event. So there is a lot of cash on the table here. So when it comes to the breakdown of customer acquisition as well as retention, what are we talking about here and what about quality.

Jordan: You know the quality of the player. Because you know everyone goes to Super Bowl parties. Everyone talks about gambling these days. People are downloading the apps. What is this? Let's try this. Let's deposit some money for a lot of the more casual users, though, that's a one time thing. They download the app, they make a couple bets. Next day they forget about it, delete the app. So the quality of the player that is coming in during Super Bowl isn't maybe the best, if you know the start of the NFL season. Those are the core sports bettors and sports betting. Core sports bettors is what drives the revenue. It's not that casual player. Those aren't the profitable players. So you know, in the two weeks leading up, we often see, you know, 1 million or 2 million downloads across all the sports betting apps. But at the end of the day, the churn rate is often higher across those apps. And once we exit the Super Bowl, you get the March Madness bettors to come back. But it's a lot of those casual players have fallen off, and it's just not a good spend for ROI for these companies.

Remy: Yeah, and you bring up an important point because you're looking at the outlook, you're looking at the app downloads and obviously the demographics as well. But for people who are not quite familiar with how this works when it comes to the different buckets, what would you say to them and what are your expectations as we head into the rest of 2026 and into March Madness?

Jordan: Yeah. So look, the core, the core sports bettor is this 35 year old male. And what we're seeing, especially in the prediction markets now is, you know, Kalshi and PolyMarket and some of these companies, they're blasting their message out there. My dad knows about this. My dad knows about it. It's gone pretty mainstream at this point. So you know right now we're seeing kind of a little bit of everyone. We think ultimately it's going to be the sharp bettors. The more, you know, the high, the more educated players. Not necessarily that retail bettor who sees a Kalshi ad TV. What is this? Downloads it. Sees a DraftKings app. You know what is this? So ultimately, we think it's going to go back to more of that 35 year old male demographic. But right now it's you know, it's capturing a lot of people. And what we've seen over the last couple of months is, you know, Kalshi's app has been downloaded close to 5 million times since the start of the NFL season. You know, that's a lot. That is significantly more than what we're seeing across any sports betting company right now. And it's just, you know, feeding the funnel. You know, they're getting their message across social media, TV, ad, radio. And it's not just them. It's everyone you're seeing all over Robinhood and some of these other platforms. So right now we're kind of at that peak maybe moment for the industry of like everyone is, you know, somewhat familiar with what this is eventually. You know, we think it is going to kind of fall off back into the core sports betting demographic, which is going to tend to be a little bit more of an advanced sports bettor.

Remy: And finally, before I let you go and before we head into Super Bowl weekend, out of all these names that you mentioned, when all is said and done, Which do you think will end up being the leaders?

Jordan: Yeah. Look, it's been a tough for the 5 to 6 months across this space prediction market, is this overhang across the business. You know then it kind of goes into what is the company specific catalyst? And what we've seen is a lot of headwinds in the industry. And then it leads back into like the prediction market is an overhang. So you know, as we look at the landscape right now, stocks have fallen anywhere from like 40-60% in the last six months. Ultimately we think this is overblown.

Ultimately think, you know, prediction markets will be a positive for the industry. We look to companies like a DraftKings or a Genius Sports to actually, you know, it might be slightly beneficial or negative for the core business, but net net overall prediction markets will help expand the overall revenue and profitability So we point to those two companies as kind of a way to own the space.

Remy: Well, Jordan, it was great having you here. Thank you so much for joining me ahead of the Super Bowl. And thank you so much for sharing your perspective and all of your insights.

Jordan: Thank you.

Remy: Thank you.