Ambling with Grambling #35: Unit economics of vertically integrated Prediction Markets vs. OSB

Research evidence excerpt

Not for redistribution without written consent of Morgan Stanley

M

Update

August 14, 2026 06:39 PM GMT

Gaming & Lodging | North America

Morgan Stanley & Co. LLC

Stephen W Grambling

Equity Analyst

Ambling with Grambling #35:

Unit economics of vertically

integrated Prediction Markets

vs. OSB

Michael J. Cyprys, CFA, CPA

Equity Analyst

Morgan Stanley & Co. International plc+

Ed Young

Equity Analyst

Morgan Stanley & Co. LLC

Nicholas P DeValeria

Equity Analyst

Molly Baum

Equity Analyst

Key Takeaways

Performance: GLL stocks were nearly universally down past two weeks on

Research Associate

earnings -1% (S&P500 +5%). VAC/HOG/WYNN were outperformers while SRAD/

PLNT/HST weakest.

Gaming & Lodging

North America

Industry View

Key Debate: We examine unit economics of vertically integrated prediction

James F Koehne, CFA

In-Line

markets vs. OSB, plus look at results from our MS intern survey on OSB/PM

preference.

2 wks behind: GLL 2Q Earnings Week 3/ 4, BC Analyst Day, NY Marketing

2 wks fwd: VIK Earnings, OSB/iGaming Regulatory Expert Call, post EPS modeling

& takeaways calls.

Investor Sentiment: Are consumer equities like the MayTag repairman

(unnecessary)? Very little interest other than a small subset of "compounders".

Key Debate: Assessing potential for vertically integrated Prediction Market unit

economics to OSB - potential for better returns, but marketing & capital

efficiency key swing factors

Exhibit 1:

Based on current disclosures of take rates across market makers /

exchange / broker coupled with tax rates, gross profit per $100 casual bet

appears better on integrated PM vs. OSB.

Prediction Market

$100

OSB

$100

$0

Broker (FCM) Fee $ Casual

Broker (FCM) Fee % Casual

$1.0

1.0%

$0

Exchange (DCM) Fee $ Casual

Exchange (DCM) Fee % Casual

$2.5

2.5%

$0

Market Maker Spread

Market Maker %

$3.0

3.0%

$10.0

10.0%

Total Gross Economics $

Total Gross Economics % Casual

$6.5

6.5%

$10.0

10.0%

Promo % Handle

Net Win

Net Revenue

GM % Broker

GM % Exchange

GM % Market Maker

GM % OSB

6.50%

$7

33%

55%

80%

Gross Profit

GM Per $100 Bet

Gross Margin % Revenue

$4.1

4.1%

63%

$3.3

3.3%

50%

Marketing / CAC

EBITDA Contribution

EBITDA Margin

EBITDA Per Casual $100

33%

$2.0

30.0%

2.0%

20%

$2.0

…