Flutter could see prediction market concerns ease as Jefferies highlights upside opportunities

Jefferies wrote that the market's absorption connected prediction markets cannibalising online sports betting had driven a 65% diminution successful Flutter's stock terms since past summertime and contributed to a valuation de-rating from 15 times endeavor worth to EBITDA to 8 times.

The analysts argued that the communicative astir prediction marketplace disruption is opening to change, with online sports betting grip maturation recovering and constricted grounds that prediction markets are taking meaningful stock successful states wherever online sports betting is legal.

"The powerful, but misplaced communicative that PMs volition cannibalise OSB has started to unravel," Jefferies wrote, adding that prediction markets could alternatively supply incremental opportunities for Flutter done market-making activity, FanDuel Predicts and regulatory leverage.

Jefferies identified market-making arsenic the largest imaginable opportunity, estimating a $340 cardinal yearly EBITDA publication if Flutter captures a 25% stock of Kalshi parlays.

The analysts noted that this accidental is important compared with Flutter's $970 cardinal fiscal 2026 US EBITDA guidance, portion statement estimates presently presume nary affirmative publication from prediction markets and alternatively bespeak astir a $300 cardinal investment.

The steadfast besides highlighted imaginable upside from FanDuel Predicts, which Jefferies estimated could lend an further $150 cardinal successful EBITDA implicit the coming years. The analysts besides pointed to imaginable regulatory benefits, including the quality for prediction markets to enactment broader online sports betting regularisation and bounds authorities taxation increases.

Jefferies estimated that prediction markets would request to trim online sports betting grip by astir 50% earlier becoming a nett antagonistic for Flutter, fixed the imaginable incremental profitability opportunities.

Ahead of Flutter's Q2 results, Jefferies expects the institution could present its archetypal US EBITDA bushed successful a year, improving assurance astir the 2nd fractional of 2026. The analysts forecast Q2 US EBITDA of $126 million, which it said would beryllium 21% supra institution guidance and 24% supra statement expectations, driven by online sports betting show and market-making.

A stronger Q2, alongside improved visibility into prediction marketplace opportunities, could assistance code capitalist concerns astir the expected second-half net step-up, Jefferies wrote.