Production Operations Desk - Incident analyst

Flutter and DraftKings are worth less than Kalshi's reported $40 billion valuation. Flutter and DraftKings are worth $24.44 billion together, less than the roughly $40 billion Kalshi is reportedly raising at. The listed sportsbooks are still growing. Investors have stopped paying a premium for that growth, and the premium now sits with a private exchange whose business depends on a court fight. Flutter Entertainment and DraftKings closed on October 26 with a combined market capitalization of $24.44 billion. Kalshi, a private prediction-market exchange, was finalizing a funding round of about $1 billion at a valuation of about $40 billion, Bloomberg reported on September 30; however, Kalshi still had not announced the round as completed. At that price, it would be worth 1.64 times the two largest listed sportsbook groups combined. The sell-off reaches beyond the two leaders. Flutter, DraftKings, MGM Resorts, which owns half of BetMGM, and PENN Entertainment lost about half their combined market value in ten months, falling from about $67.0 billion at the end of 2025 to $33.52 billion, an iGaming Express estimate. The S&P 500 rose about 12.2% over the same period. Revenue at Flutter and DraftKings is still higher than a year earlier. The price investors pay for each dollar of it is not. On 2025 revenue, Flutter now trades at 0.81 times sales and DraftKings at 1.69 times. Two peaks, one price collapse. DraftKings and PENN set their record closes in March 2021, when US states were legalizing online sports betting one after another. Flutter's peak came more than four years later, in August 2025. Flutter's market capitalization stood at $13.91 billion on October 26, against about $50 billion in June 2025. On 2025 revenue, its price-to-sales ratio has fallen to 0.81 times from 2.23 times at the end of 2025, and DraftKings' to 1.69 times from 2.81 times, iGaming Express calculated. Ed Birkin, managing director of H2 Gambling Capital, told iGaming Business in September that the fall in industry share prices had been "much more severe" than the cuts to earnings forecasts, and that valuations had been the main driver. Growth slowed, and profits fell harder. Over the trailing twelve months, revenue grew 15.2% at Flutter, 15.0% at DraftKings and 10.6% at Entain. The latest quarters were weaker. In the second quarter of 2026, Flutter's group revenue rose 3% and DraftKings' fell 5%. Profit took the bigger hit. Flutter's second-quarter adjusted EBITDA fell 45% to $508 million, its US sportsbook revenue dropped 15%, and it posted a net loss of $296 million, with net leverage at 4.3 times. Flutter cut the midpoint of its full-year revenue guidance by $395 million to $17.91 billion and of its adjusted EBITDA guidance by $210 million to $2.655 billion. DraftKings guided to $700 million to $900 million of 2026 adjusted EBITDA, including $200 million to $300 million it plans to spend on DraftKings Predictions. Entain's third-quarter net gaming revenue rose 2% at constant currency, with Brazil down 36%, according to its October 15 trading update. The company expects full-year EBITDA at the low end of its £910 million to £960 million range (about $1.21 billion to $1.28 billion) and carries net debt of about £3.6 billion (about $4.8 billion). Investors now pay 14.12 times forward earnings for Flutter, 55.65 times for DraftKings and 7.93 times for Entain. Chad Beynon, head of US research at Macquarie Capital, said that parts of the sector had also seen "a genuine deterioration in expectations." Four shocks, each already public. Britain raised Remote Gaming Duty from 21% to 40% on April 1, 2026, and a 25% rate on remote betting follows in April 2027. Entain took a £56 million (about $74 million) hit to first-half EBITDA from the first increase. Flutter will cut up to 1,400 jobs in the UK and Ireland, almost 16% of its 9,000 staff there, at a fourth-quarter restructuring cost of $80 million to $90 million, Reuters reported on October 20. Kevin Harrington, chief executive of Flutter UK and Ireland, said the company "cannot fully absorb a rise" of that size without cutting its fixed costs. Brazil banned fixed-odds betting on September 25. Licensed sites went offline on October 6, and every federal authorization lapsed on October 25 with no refund of the R$30 million (about $6 million) license fee. President Luiz Inácio Lula da Silva, who campaigned on the ban, was re-elected the same day with 51.78% of the vote. Congress has until November 23 to vote on the measure, extendable once by 60 days, and lawmakers have filed 99 amendments without voting on any. Supreme Court Justice Luiz Fux was expected to rule on challenges to the ban only after the election. Flutter's September 28 filing put its 2026 Brazil hit at $70 million of revenue and $20 million of EBITDA, against full-year revenue guidance of $17.91 billion. Jordan Bender, an equity research analyst at Citizens, told Sportico the outcome was "baked into stocks" once the ban was in place. India is the third. Flutter guided to a $250 million revenue hit there in 2026 and $310 million in 2027. The fourth is the one the listed groups are now paying to join. Prediction markets traded $118.9 billion of contracts across all categories, counted at $1 face value, in the 30 days to October 26. Kalshi handled about 76% of that, or $89.9 billion, up 56% on the previous 30 days. DraftKings Predictions took 3%. Not everything fell. Evolution closed at SEK 837 (about $88), above the SEK 695 (about $73) a share that Candle Lake offered on August 13 in a bid that valued the company at about $14 billion. Caesars Entertainment closed at $28.99, close to its 52-week high of $30.88, with its market capitalization up 25.6% over twelve months. It reports third-quarter results after the close on October 27. At the other end, Bally's Intralot agreed on June 5 to pay 52 pence (about 69 cents) a share, about £243 million (about $323 million), for Evoke. Evoke had paid £2.2 billion (about $2.9 billion) for William Hill. The premium moved next door. Kalshi raised $1 billion at a $22 billion valuation in March. Six months later, Bloomberg reported it was finalizing a round at about $40 billion, and that Polymarket was finalizing one at about $21 billion. Kalshi's price depends on a legal question the listed sportsbooks answered years ago by applying for licenses state by state: who gets to license a bet on a game. Federal appeals courts have split on whether federal commodities law shields sports event contracts from state gambling rules. The Third Circuit ruled for Kalshi and against New Jersey on April 6. On August 28, a three-judge Ninth Circuit panel unanimously held that sports event contracts are not swaps and that federal law does not preempt state gambling regulation, according to DLA Piper's tracker. The Sixth Circuit ruled for Ohio and Tennessee on September 25. New Jersey asked the US Supreme Court on September 2 to settle the question. The NFL and attorneys general from 39 states and the District of Columbia have filed briefs backing the state, and Kalshi's response is due on November 9. The Commodity Futures Trading Commission (CFTC) faces the same resistance. It published proposed rules for the market on June 10, and by the July 27 comment deadline 44 states had disputed its authority. Nineteen states are in litigation over prediction markets, and the CFTC has sued six of them. MGM Resorts reports on October 28, Flutter on November 4, and DraftKings and PENN on November 5. Kalshi's answer to New Jersey's petition is due four days later, and Brazil's Congress has until November 23 to vote on the ban.

Betfair is closing its Brazilian operations as parent company Flutter Entertainment focuses on a single brand there, Betnacional. Flutter confirmed the move on October 23, three days after it proposed up to 1,400 job cuts in its UK and Ireland division. Brazil banned fixed-odds sports betting and online casino games on September 25, and Flutter halted its Brazilian business. It estimates staying offline for the rest of 2026 would cut revenue by about $70 million. Flutter links the UK and Ireland cuts to higher gambling taxes. Remote Gaming Duty on online casino games rose from 21% to 40% in April 2026, and most remote betting will face a 25% rate from April 2027, up from 15%. Flutter expects restructuring costs of $80 million to $90 million in the fourth quarter.