“It’s a very highly regulated industry, and everyone will push that limit until they know they can anymore.” ~ Jordan Bender on prediction markets testing the boundaries
“The bottom 25% or even the median player in prediction markets is losing multiples of what you would in a traditional sports book, offshore book, bookie, sweepstakes, et cetera.” ~ Jordan Bender
“This is peak euphoria... Come next football season, people are like, I hated that experience. I can go back to the sports book where it’s a little bit more controlled and I’m not losing my shirt every time I log on.” ~ Jordan Bender
“[corporate] Tax rates never go down. I can probably count it on one hand or maybe one finger at times that tax rates have actually gone down in the world.” ~ Jordan Bender
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In this episode of the Straight to the Point Talking Shop podcast, I chatted with Jordan Bender, Equity Research Analyst at Citizens, about the rapid evolution of the gambling and sports betting industry. Every episode is great, but this episode in particular offers invaluable insights for investors, operators, and industry watchers.
*STTP uses AI to help with show notes.
Key Discussion Points:
(00:00:31 - 00:03:30): Jordan recounts joining the gaming world right as sports betting exploded post-PASPA. He contrasts the rapid US expansion with mature European markets, noting how companies like Flutter provide blueprints for sustainable operations.
(00:04:23 - 00:11:01): We discuss the unexpected blowback, including marketing restrictions, tax hikes, prop bet bans, and credit card prohibitions. Jordan argues these were inevitable, mirroring international trends toward consumer protection, but they’ve caught some operators off guard, impacting valuations.
(00:11:04 - 00:15:02): W discuss Missouri’s strong debut within the context of inflated handles from bonuses. Jordan highlights how US promo levels remain 2-3x higher than abroad, fueling churn and irrational spending.
(00:15:10 - 00:43:51): We take a deep dive into the rise of platforms like Kalshi and Polymarket. Jordan warns of their “Wild West” nature — lacking guardrails, high churn from peer-to-peer betting, and risks like insider trading. I brought up some of the parallels to early online poker, where sharp players dominate casuals, potentially leading to burnout. We also explore misaligned incentives, regulatory gray areas, and how legacy operators are cautiously entering while facing license threats.
(00:43:51 - 00:51:19): Jordan predicts prediction markets will persist but hit ceilings from regulations, elections, and sports leagues’ involvement. Like STTP’s thesis, we discuss how non-sports contracts may drive growth, but traditional betting won’t vanish. Expect messiness through 2028, with headlines, court rulings, and hopefully(?) a “new normal” emerging.
Disclosures from Citizens
DKNG:
Citizens JMP Securities, LLC. expects to receive OR intends to seek compensation for investment banking services from DraftKings Inc. in the next three months.
Citizens JMP Securities, LLC currently makes a market in the security of DraftKings Inc.
Citizens JMP Securities, LLC, or its affiliates have received compensation from DraftKings Inc. for products or services other than investment banking services in the previous 12 months.
Citizens JMP Securities, LLC, was manager or co-manager of a public offering of securities for DraftKings Inc. (DKNG) in the past 12 months and received compensation for doing so.
FLUT:
Citizens JMP Securities, LLC. expects to receive OR intends to seek compensation for investment banking services from Flutter Entertainment plc in the next three months.
Citizens JMP Securities, LLC, or its affiliates have received compensation from Flutter Entertainment plc for products or services other than investment banking services in the previous 12 months.
Citizens JMP Securities, LLC, was manager or co-manager of a public offering of securities for Flutter Entertainment plc (FLUT) in the past 12 months and received compensation for doing so.
GENI:
Citizens JMP Securities, LLC. expects to receive OR intends to seek compensation for investment banking services from Genius Sports Limited in the next three months.
Citizens JMP Securities, LLC currently makes a market in the security of Genius Sports Limited
Citizens JMP Securities, LLC, or its affiliates have received compensation from Genius Sports Limited for products or services other than investment banking services in the previous 12 months.
RSI:
Citizens JMP Securities, LLC. expects to receive OR intends to seek compensation for investment banking services from Rush Street Interactive, Inc. in the next three months.
Citizens JMP Securities, LLC currently makes a market in the security of Rush Street Interactive, Inc.
SRAD:
Citizens JMP Securities, LLC currently makes a market in the security of Sportradar Group AG
Citizens JMP Securities, LLC. expects to receive OR intends to seek compensation for investment banking services from Sportradar Group AG in the next three months.
Citizens JMP Securities, LLC, was manager or co-manager of a public offering of securities for Sportradar Group AG (SRAD) in the past 12 months and received compensation for doing so.
