BetMGM Cuts Guidance on Prediction Market Pressure; Why It Matters for Better Collective

We continue to believe that BETCO is facing structural pressure on its business model and is aggressively deploying buybacks primarily to prop up the share price. We outline our thoughts on the structural challenges in a recent Research Report, found here for our Premium members. In this Note, we present data points from the report, along with new data.

Working against our Underperform rating is the coming FIFA World Cup, but we belive that will only create a short-term breather. BETCO’s challenges are structural and not directly company-specific. Being priced at 2-3x the multiples of its closest peers is what makes us extra pessimistic.

After a rather strong Q4, our traffic indicators are pointing downward again despite the Winter Olympics.

One of the core parts of our negative view is that prediction markets are a structural issue, as betting participants are moving away from regular sportsbooks. BetMGM just cut its financial guidance due to the rise of Kalshi and others. We found it prudent to dig a little deeper.

BetMGM has become the first major US sportsbook operator to cut financial guidance and explicitly name prediction markets as a contributing factor. In its Q1 2026 results, the company lowered full-year revenue guidance from $3.1-3.2B to $2.9-3.1B and scaled back EBITDA expectations to the low end of its $300-350M range, citing escalating customer acquisition costs driven by the expansion of prediction markets. Q1 revenue came in at $696M, up 6% year-over-year, but the margin pressure was enough to force a recalibration. CEO Adam Greenblatt did not mince words, describing prediction market platforms as "new sports betting companies" and acknowledging material near-term pressure. He argued players will eventually return to state-licensed sportsbooks, "unless you are in high school," but the guidance cut tells a more concrete story. BetMGM has deliberately chosen not to enter prediction markets. This is the first time an operator has attached a dollar figure to what was, until now, a theoretical competitive threat.

The legal momentum behind prediction markets has accelerated sharply in recent weeks. A summary of the key developments:

The state-by-state battles are intensifying, but each federal court win strengthens the preemption argument. Combined weekly prediction market volume hit an all-time high near $6.5B for April 6-12. Kalshi alone posted $3.54B in notional volume, including more than $545M on the Masters Tournament, a single sporting event that generated more volume on one CFTC-regulated exchange than the entire US-regulated sportsbook industry typically handles for the Masters ($300-400M).

The sportsbook operators are behaving as if the structural shift is real. Flutter trades near $105, down roughly 53% year to date. DraftKings fell 13.5% on soft 2026 guidance, with sales and marketing costs at $442.6M for Q4 2025, up roughly 20% year-over-year. State-level March 2026 handle data shows mature US markets softening: New York down 4.7%, Indiana down 6.5%, Kansas down 6.5% year-over-year. The operator group rallies on headlines signaling regulatory constraint and sells off on every signal of prediction market scaling. DraftKings, FanDuel, Fanatics, and Bet365 have pooled $48M into a super PAC explicitly citing prediction markets as the motivating threat, while both DraftKings and Flutter have launched their own CFTC-regulated event contract products as a defensive hedge. DraftKings and FanDuel chose to exit Nevada over their preference for prediction markets. Greenblatt said he is "controlling the controllable" and not assuming irrational competitor spending becomes rational. The prediction market platforms are spending aggressively on customer acquisition, and sportsbooks are losing the fight for marginal bettors.

This matters for Better Collective because the company sits downstream of sportsbook economics. In our February 2026 report, we identified prediction markets as one of several structural headwinds facing BETCO, alongside deteriorating SEO traffic, AI search disruption, and regulatory tightening. The thesis was that prediction markets would erode sportsbook volumes over time, which in turn reduces the value of the affiliate traffic BETCO sends to those sportsbooks. BetMGM's guidance cut provides the first concrete, operator-level evidence that this erosion is happening now, not in some distant future scenario.

The supplier side has split on how to respond. On Kambi's (One of the leading sportsbook suppliers) February 18 Q4 call, CEO Werner Becher ruled out prediction markets entirely, telling investors that US regulators had sent "very clear statements" that entering the category would risk "losing some license, and therefore also customers relying fully on us."

Better Collective moved the opposite way. On March 19, the company launched dedicated prediction market editorial hubs on Action Network and VegasInsider, a standalone prediction market site, and partnerships with leading prediction market platforms.

Co-CEO Jesper Sogaard framed it as US TAM expansion. Nearly a month in, the execution is not visible. The flagship VegasInsider prediction-markets hub ranks at position 34 in US organic search for the core keyword "prediction markets" (18,100 monthly search volume, SEO difficulty 63) and captures an estimated 16 monthly visits, per Ubersuggest.

The question we raised in February remains unanswered: do the state-regulator warnings that forced Kambi out also apply to Better Collective as an affiliate? Several regulated states require direct affiliate registrations that could be challenged if Better Collective sends traffic to operators classified as illegal gambling under state law. There is also commercial friction with existing sportsbook affiliate partners DraftKings and FanDuel, which now compete directly with the prediction market venues Better Collective is promoting.

None of this is happening in isolation. Prediction markets are one source of uncertainty among several, and the cumulative picture is what matters.

Google has rolled out three core updates in four months (December, February Discover, March broad), with 71% of affiliate sites negatively impacted by the March update alone. A recent 600,000-page analysis by JetDigitalPro identified affiliate sites as the single hardest-hit category, with typical traffic drops of 20 to 35% and some pages down more than 50%. The study explicitly flagged "thin affiliate pages" and "freeloader pages attempting to benefit from the domain's credibility," a description that maps directly to the domain-authority-borrowed subpage model that BETCO has relied on across its network.

AI Overview now appears in an estimated 58% of queries, up from roughly 12% in 2024, and produces an 83% zero-click rate on queries where it is triggered. We do not claim to know exactly how much of this translates into BETCO revenue loss, but the direction is clear and the pace is accelerating.

Consumer search behavior is changing structurally, betting behavior is fragmenting across new platforms, and the regulatory environment for both prediction markets and gambling affiliates remains unsettled. Each of these forces introduces uncertainty into BETCO's forward earnings, and they are all moving at the same time.

As discussed earlier, the one near-term positive is the FIFA World Cup this summer, which will boost sports betting volumes across the industry. But if search behavior and betting behavior have both shifted, the World Cup uplift will be more muted than the market is pricing in. A strong quarter driven by a tentpole event does not resolve structural questions. Q1 2026 results on May 20 will be the first hard data point where the cumulative impact of core updates, prediction market competition, and AI search disruption should begin to surface in actual numbers.

The valuation compounds the problem. At SEK 137.80, Better Collective trades at 13.8x NTM EV/EBIT, roughly double the multiples of its closest peers: Gambling.com Group (GAMB) at 8.0x and Gentoo Media (G2M) at 5.7x. Even on a two-year forward basis, BETCO trades at 10.8x versus 6.1x for GAMB and 5.3x for G2M.

NTM expectations have reversed slightly since late March, but the share price has not yet caught up. Our SEO tracker indicates traffic declines of about 4% vs Q4 and 14% Y/Y, despite there being a winter Olympics during the quarter.

We have written multiple times that the share price is being held up by the buyback program, and that dynamic continues. The board launched a new EUR 40M program in March, but the company had roughly EUR 13M in cash at year-end 2025. That is a significant capital commitment for a company with limited balance sheet flexibility, and it raises questions about allocation priorities when the business faces multiple structural headwinds.

The structure of the program raises further questions. Co-founders Jesper Sogaard and Christian Kirk Rasmussen, holding approximately 36.3% combined, are participating pro rata in EUR 30M of the EUR 40M program, selling EUR 10.9M of personal stock into the company's own buyback. The transaction was disclosed as "solely for personal liquidity." This is a legal and common mechanism in Scandinavian markets, but the optics are worth examining: the company is effectively funding insider liquidity while framing the buyback as shareholder-friendly capital return. Of the EUR 40M program, only the portion not absorbed by insider sales reduces the float. Management has framed the buyback as a positive signal of confidence. Our view is that the program functions, at least in part, as a structured insider sale at a premium valuation, funded by the company's own cash flow.

The company is still producing free cash flow, but directing the bulk of it toward price support and insider liquidity rather than adapting to a changing landscape is not, in our view, a strategy that compounds value. Especially when buybacks are happening, if regulatory, commercial, and execution risks are all being priced at zero, the prediction market pivot compounds the Underperform thesis rather than offsetting it. BetMGM's guidance cut is the kind of data point that turns a structural concern into a measurable one, a sort of canary in the coal mine if one will.

Disclaimer

This analysis represents the independent views of Lind Research and is based on publicly available information believed to be reliable, but no warranty is given as to its accuracy or completeness. Nothing herein is investment advice or a recommendation. We publish openly, and companies do not influence our conclusions. Lind Research may hold positions in securities discussed.

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