Caesars Can Ward Off Prediction Markets Threat, Says Analyst

• Caesars Digital posted impressive 2025 results
• Analyst says prediction markets could expand sports betting market
• Caesars resisting prediction markets entry for the time being

Caesars Entertainment (NASDAQ: CZR) is most known for its sprawling portfolio of US brick-and-mortar casinos, but the company has exposure to iGaming and online sports betting.

At least one analyst believes the operator can fend off the competitive threat of prediction markets – an emerging industry that’s weighted on shares of Caesars’ online rivals such as DraftKings (NASDAQ: DKNG) and FanDuel owner Flutter Entertainment (NYSE: FLUT). In a new report, Morningstar analyst Dan Wasiolek says that while yes/no exchanges present some competitive threat to traditional sportsbooks, the latter may benefit from the former’s move into sports event contracts.

While predictive event competition presents some risk to traditional betting platforms, we believe they can expand the sports betting opportunity more than cannibalize it, with traditional online platforms continuing to offer the superior experience,” observes the analyst.

There’s some fundamental rationale in those claims. As Wasiolek points out, Caesars’ digital business notched 2025 revenue growth of 21% as earnings before interest, taxes, depreciation, and amortization (EBITDA) margins surged 17% and that was against the backdrop of prediction markets significantly expanding sports offerings.

Caesars Unlikely to Push Into Prediction Markets Over Near-Term

While internet rivals such as DraftKings and FanDuel are responding to the prediction markets threat with related platforms of their own, that’s a road Caesars is unlikely to travel anytime soon.

On the company’s fourth-quarter earnings conference call last month, CEO Tom Reeg said the current regulatory environment isn’t conducive to a prediction markets entry because the operator wants to protect its various state gaming permits. Some state regulators have warned gaming companies that if they move into prediction markets, their sports betting licenses could be at risk.

For Caesars, that prudence could prove smart because Maine recently approved iGaming and Virginia is expected to do the same, potentially opening the door for the company to procure related licenses in those two states – a task that could be made difficult with prediction markets exposure. Wasiolek sees Caesars maintaining mid-single-digit shares of the US internet wagering market with margins expanding to the mid-20s later this decade.

“Our positive stance is despite the competitive risk of predictive event platforms, which we think will mostly expand the opportunity for traditional online sports betting companies,” adds the analyst.

What Will Become of Caesars Digital?

Though not mentioned in the Morningstar report, the fate of Caesars Digital is a long-running source of speculation. Management believes strides in that business aren’t adequately reflected in the share price and some analysts say the unit is worth more than the entire company.

There’s been chatter of a possible spin-off, which would allow Caesars to create shareholder value and raise cash to lighten its well-documented debt burden, but that talk has died down a bit in recent months.

A possible curveball emerged with recent speculation that Caesars itself is weighing takeover offers from multiple suitors, including the management team and Tilman Fertitta.