THE HOUSE EDGE

What the house knows. Occasionally.

Issue #12 | October 18, 2026

Covers October 5 to October 18. Share prices are to the October 16 close.

THE LEAD

• The Commodity Futures Trading Commission (CFTC) proposed on October 9 that event contracts on sports, politics, culture and weather are swaps. A swap is a financial contract the federal CFTC regulates, outside the reach of state gambling regulators. A second rule, in force from October 19, leaves sportsbooks and casino games licensed by states or tribes with the states. The federal regulator now argues Kalshi’s side while the Supreme Court decides whether to hear New Jersey’s case.
• Macau’s casinos took about MOP729m a day from October 5 to 11, against an October consensus of MOP777m a day (UBS). Golden Week brought 8.3% more visitors than the same seven days of 2025, yet Haitong and JP Morgan put holiday gaming revenue down 5% to 7% y/y. The rest of October must average MOP744m a day to reach consensus.
• Kalshi traded $60.7bn of contracts at face value in September, up 52% m/m. The cash customers paid rose 21% m/m, to $14.7bn (DeFi Rate). Exchanges count every contract at $1, and cheap combination contracts, the exchange version of a parlay, swell that figure. October’s first 17 days ran 57% ahead of the same days of September at face value and 44% ahead in cash. Daily volume held up after Kalshi’s volume incentive program was due to end on October 13.
• The UK Budget on October 28 may raise the tax on gaming machines. Six betting chief executives asked the Chancellor for no rise on October 14. Two days later, 90 Labour MPs backed doubling the rate on higher-stakes machines to 40%. Entain says doubling would cost it about £100m a year. The tax on online sports bets already rises to 25% from 15% in April 2027.

THE TAPE

Share price change to the October 16 close, in local currency. Since Oct 2: this issue’s two weeks. YTD: since the Dec 31, 2025 close (Dec 30 for Stockholm, Milan and Seoul). LTM: last 12 months.

Heatmap of share price changes for 28 gaming stocks: since Oct 2, year to date and last 12 months. Source: StockAnalysis, closes to Oct 16, 2026

Big moves since October 2 with a clear cause:

• Galaxy +10.7%. Chairman Francis Lui bought 4.61m shares at an average HK$28.25, about HK$130m, on October 2, taking his family’s stake to 54.24% (HKEX filing).
• Churchill Downs +7.4%. Investor Mike Repole, the Vitaminwater co-founder, disclosed about 1.5% of the shares on October 8 and said he “may acquire more.” The stock rose 5.0% d/d the next day.
• Allwyn +11.0%. The Valea Foundation, top parent of Allwyn’s controlling shareholder, bought €38.5m of shares from October 6 to 14, starting the day after the company’s own buyback ended. The rise recovers part of the fall after Brazil’s betting ban.

THE SCOREBOARD

Company	The one number	Stock on the day	Takeaway
BetMGM, Q3 (Oct 13)	EBITDA $86m, against $41m a year earlier	Entain +4.7%, MGM +0.3%	Guidance held, at the low end. The $500m EBITDA target is now “in the coming years”
Entain, Q3 (Oct 15)	UK and Ireland online revenue +14% y/y	-1.2%	Brazil -36% y/y. EBITDA at the low end of £910m to £960m

Stock on the day: close to close on the release day. Both released before the market opened.

THE BOOK

US iGaming, Sports Betting & Prediction Markets

Courts and states: the states keep enforcing

Where	Date	What happened	Who it favours
Ohio	Oct 16	Cease-and-desist deadline for 10 platforms passed. Only Plus500 said it would stop	The state, on paper
Missouri	Oct 16	Novig and Crypto.com‘s Nadex unit sued the state in federal court	Pending
Tennessee	Oct 9-13	Cease-and-desist letters went out. Underdog sued, its seventh state lawsuit	Pending
Connecticut	Oct 8-10	ProphetX, Gemini and Webull agreed to stop sports contracts. Six of nine letter recipients have not	The state
Michigan	Oct 7	Coinbase agreed to stop sports contracts. The state asked a court to hold Kalshi in contempt over advertising. Hearing Nov 24	The state
Kentucky	Oct 14	A magistrate judge recommended sending the state’s suits against Kalshi and Polymarket back to state court	The state
New York	Oct 12	Polymarket US asked a federal court to stop New York enforcing its gambling laws. It says the state seeks $4.6bn from it	Pending
Sixth Circuit	Oct 9	Kalshi asked the court to rehear its September 25 loss	Pending
Supreme Court (No. 26-299)	Sep 22-Oct 8	Eleven briefs back New Jersey, including the NFL, 39 states and DC, and 145 tribes and tribal groups. Kalshi replies by Nov 9	Pending

• Tribes. Kalshi announced app deals with four tribes on October 7. The chief of one tribe called the deal “false”, and the California and Oklahoma tribal gaming associations criticised the deals. On October 8 the Seminole Tribe sued DraftKings and chief executive Jason Robins in Florida over Pick6 and the prediction-market sports tab in DraftKings’ app.
• Why the tribal deals matter. Tribes are among the strongest plaintiffs against prediction markets. Their case rests on harm to the casino rights a federal law, the Indian Gaming Regulatory Act, gives them. That claim gets weaker each time a tribe partners with Kalshi and shares in the revenue. If more tribes sign, lawsuits to block prediction markets become much harder to win.

In short: states win on enforcement while the cases run. The operators’ best hopes are federal: the CFTC’s rule and the Supreme Court.

Federal: the CFTC picks a side

• Proposed rule, October 9: event contracts on sports, politics, culture and weather are swaps. Comments are due 30 days after it appears in the Federal Register, which has not happened yet.
• Interim rule, in force October 19: sports bets and casino games offered by state- or tribal-licensed operators are not swaps, as long as they do not trade on an exchange. Comments close November 18.
• Why the CFTC is doing it: states have won most court rounds, including two federal appeals courts, by arguing these contracts are gambling. A formal rule puts the federal regulator’s view in writing, and Kalshi can cite it in every court and at the Supreme Court. Chair Michael Selig calls the contracts “commodity derivatives squarely within the CFTC’s regulatory remit.”
• How: by its own rulemaking, without a new law. The CFTC is using powers it already has under the Commodity Exchange Act. Congress added swaps to that law in 2010, in the Dodd-Frank Act, and told regulators to define the term in detail. Congress can still overrule the agency with a new law. Senator Ted Cruz plans such a bill after the November 3 midterms, to bar gambling-type contracts unless state law allows them (Bloomberg Tax via Prediction News, October 16). This rests on one report, and there is no bill text yet.

In short: the CFTC claims the exchanges and leaves licensed sportsbooks and casinos to the states. Courts no longer defer to an agency’s reading of a law, since the Supreme Court’s 2024 Loper Bright decision. So the rule adds weight to Kalshi’s argument without settling it.

Correction: last issue said the second rule would bar casino-style products. As published, it excludes state- and tribal-licensed gambling, including sportsbook bets, from the swap definition.

• FTC: the Federal Trade Commission is in the early stages of reviewing FanDuel’s and DraftKings’ advertising, The Washington Sun reported on October 13, citing three unnamed sources. DraftKings says it has received no formal demand for documents. DraftKings fell 4.2% d/d and Flutter 4.9% d/d the next day.
• Senate: Senator Richard Blumenthal asked FanDuel about its VIP program, with answers due October 20. He says DraftKings, Kalshi and Polymarket are next.
• Incentives: CFTC staff asked Kalshi, Polymarket, Novig and other exchanges about their incentive programs, with replies due October 28, Front Office Sports reported. The letter is not public.

Gatekeepers: ads and leagues

• Google bars prediction-market ads in five states that have sued operators: Nevada, Ohio, Michigan, New York and Connecticut. From October 21 it lets certified online casino operators buy the banner at the top of YouTube’s homepage.
• The NBA told its partner sportsbooks on October 16 to stop same-player under parlays, opening-tip bets and unders on players expected to play under 12 minutes. The rules bind licensed sportsbooks, not exchanges. Commissioner Adam Silver wants access to prediction-market trading data.

Volume and cannibalisation

Grouped bar chart of Kalshi’s monthly volume in 2026: face value rose from $9.5bn in January to $60.7bn in September, while the cash customers paid rose from $3.8bn to $14.7bn. October 1 to 17: $48.1bn face value, $11.1bn cash. Source: DeFi Rate

• Kalshi held 76% of the prediction-market volume DeFi Rate tracks over the 30 days to October 17.
• Macquarie (October 9): September US exchange volume was $20.1bn, counting only the side that takes a price. Of about $17bn in sports, Kalshi had 63%, DraftKings 4% and FanDuel 3%. Macquarie expects $186.8bn of exchange volume in 2026, against about $22bn in 2025.
• How much are exchanges taking from sportsbooks? The estimates range widely:

Source	Estimate
Citizens (Jordan Bender, Oct 10)	About 45% of sports betting in legal states cannibalised. Says new exchange customers are growing the total market
Indian Gaming Association study by KlasRobinson (Oct 12)	Tribal and commercial gaming could lose $7.3bn to $39.4bn a year if exchanges operate nationwide. Commissioned by tribes
BetMGM, Q3 call (Oct 13)	Nevada online sports handle +8% y/y, in a state where exchange sports contracts are blocked

In short: Nevada is the closest thing to a control group, and BetMGM’s handle there is still growing.

Sportsbook results

New York online sports	Handle	y/y	Gross gaming revenue	y/y	Hold, 2026 vs 2025
Q2 (13 weeks to Jun 28)	$6.52bn	+8.0%	$566m	-12.1%	8.7% vs 10.7%
Q3 (13 weeks to Sep 27)	$5.97bn	+5.4%	$540m	+0.1%	9.1% vs 9.5%
Q4 to date (2 weeks to Oct 11)	$1.20bn	+4.8%	$101m	+2.3%	8.4% vs 8.6%

Source: New York State Gaming Commission weekly report, computed by The House Edge.

• New York: customers bet more in every period. Revenue followed hold, which is luck. In the second quarter the books kept two points less of each dollar, so revenue fell 12.1% y/y on 8.0% more betting.
• BetMGM, Q3: online sports handle $3.24bn, up 3% y/y. Online casino revenue $483m, up 6% y/y. Holding guidance at the low end, $300m of EBITDA, means at least $115m in the fourth quarter. Chief executive Adam Greenblatt expects the Supreme Court to rule against prediction markets: “I think the key test is whether this was the intent of Congress.”
• Louisiana extended DraftKings’ licence to February 19, 2027, with seven conditions, after asking about AI targeting of losing bettors.

So what?

• What changed: the federal regulator formally backed the exchanges. States kept enforcing, and federal and state officials turned to licensed sportsbooks’ marketing.
• What was priced: Flutter is down 64.8% YTD and DraftKings 45.2%. Both fell over 4% on the FTC report.
• What to watch: Kalshi’s Supreme Court reply (November 9), exchanges’ answers to the CFTC on incentives (October 28), and whether Kalshi’s cash volume keeps pace with its face value.

THE STRIP

Las Vegas

Canadian visitors: still a third below 2024 by car

Bar chart: Canadian return trips from the US in September, indexed to 2024. By car 65 in 2025 and 69 in 2026. By air 73 and 81. Source: Statistics Canada

• Canadian-resident return trips from the US by car in September were 31.1% below September 2024, Statistics Canada reported on October 13. Air trips were 18.7% below.
• Car trips rose 5.6% y/y, but Statistics Canada advises caution because NEXUS travellers joined the count in September. Canada has historically been the largest international source of Las Vegas visitors.

So what?

• What changed: Canadian car travel to the US still runs a third below 2024.
• What was priced: the Las Vegas names are down 22% to 42% YTD. Caesars is the exception, because it trades on Fertitta Entertainment’s $31.00 cash offer.
• What to watch: Las Vegas Sands on October 21 for both Las Vegas and Macau demand, and Nevada’s September figures on October 29.

THE ORIENT

Macau & Asia

October so far: MOP729m a day

Bar chart of Macau monthly gross gaming revenue, September 2025 to September 2026, with y/y labels, four months of decline, and the October 2026 forecast range of MOP22.4bn to MOP24.1bn. Source: DICJ

• Third quarter (DICJ): gross gaming revenue MOP60.22bn, down 3.8% y/y. Mass, including slots, fell 5.2% y/y to MOP43.31bn. VIP was flat at MOP16.91bn. Mass is the most profitable segment, and it is the one falling.
• October to date (UBS): MOP836m a day for October 1 to 11, against MOP804m a day for the first 12 days of October 2025. October 5 to 11 slowed to MOP729m a day.

Forecaster	Date	October	y/y	Q4 y/y
CLSA	Oct 5	MOP24.1bn	flat	-1%
Consensus (via UBS)	Oct 13	MOP24.1bn (MOP777m a day)	flat	not stated
Seaport	Oct 5	MOP22.9bn	-5%	flat
JP Morgan	Oct 2	MOP22.6bn	-6%	-6%
Jefferies	Oct 13	about MOP22.4bn	-7%	-2.4%

October 2025 was MOP24.09bn. Jefferies’ October figure is computed from its -7% y/y forecast.

Golden Week: more visitors, less spent by each

October Golden Week	2019	2025	2026
Holiday	Oct 1-7 (7 days)	Oct 1-8 (8 days)	Oct 1-7 (7 days)
Visitor arrivals	985,000	1,144,000	1,143,000
Arrivals a day	140,700	143,100	163,300
Mainland visitors	798,000	943,000	972,000
Hotel occupancy	94.0%	87.9%	91.3%
Average room rate	MOP1,842	MOP1,699	MOP1,677
Gaming revenue per day (broker estimate)	MOP1.15bn (JP Morgan, full holiday)	MOP1.1bn (JP Morgan, first 5 days)	about MOP1.03bn (Haitong, first 4 days)
October gaming revenue	MOP26.44bn	MOP24.09bn	Due Nov 1

Arrivals are the tourism office’s first counts. 2019 hotel figures cover hotels and guest houses only, so they are not strictly comparable.

• Against 2019: 16% more visitors, about 11% less gaming revenue a day and room rates 9% lower. Each visitor spends less.
• The 2025 base is soft. That holiday ran eight days, because the Mid-Autumn Festival fell on October 6, and Typhoon Matmo shut border crossings for part of October 5. Over the same seven days, 2026 arrivals rose 8.3% y/y, against the official 15.5% daily figure.
• 2019 and 2026 are the cleanest pair: both ran seven days, with Mid-Autumn outside the holiday. In 2026 Mid-Autumn fell on September 25, a week earlier, which may have pulled some trips forward.

Key drivers

• The trust tax: October 22 ends a 90-day grace period to declare and pay overdue tax on offshore trusts without late-payment interest, KPMG says. The 20% tax on trust income continues after that. Wealthy mainland Chinese are leaving offshore trusts and selling or borrowing against shares to raise cash, Reuters reported on October 16. The article does not mention Macau.

Correction: last issue called October 22 the payment date for the tax and said the hit to Macau’s premium players had an end date. October 22 only ends the interest-free grace period for overdue tax. The tax itself continues, so the pressure has no fixed end.

• Promotions and margins: Texas Capital said on October 16 that one more of the six concessionaires had raised promotions. It is “less optimistic promotional levels will decline over the next several quarters.” Melco fell 3.9% d/d that day. CLSA expects third-quarter sector EBITDA of US$1.84bn, down 11% y/y.

Rest of Asia

• Korea: the government plans to raise the top casino levy to 15% of revenue from 10%. Shinhan estimated in July that this would cut 2026 profit 37% at GKL and 29% at Paradise. GKL’s president told the National Assembly that MGM Osaka could cut its revenue 5% to 10%.
• Malaysia: Genting Berhad, which owns Resorts World Las Vegas, plans a MYR1.25bn (US$306m) rights issue, MYR800m of it to repay debt. CreditSights expects net debt to fall only to about 4.3 times EBITDA.

So what?

• What changed: mass revenue, the profitable segment, fell 5.2% y/y in the third quarter. October is tracking below consensus despite more visitors.
• What was priced: Galaxy rose 10.7% since October 2 on its chairman’s buying. SJM fell 8.4% to new lows, and Melco is down 45.2% YTD.
• What to watch: Las Vegas Sands on October 21 and October revenue on November 1. A print near MOP24.1bn would suggest the premium slowdown was temporary. A print near MOP22.4bn would say fourth-quarter consensus is too high.

THE OLD WORLD

Europe, plus Brazil

UK Budget: the lobbying timeline

Timeline of UK tax lobbying from Jul 1 to the Oct 28 Budget, with dated statements from the Social Market Foundation, The Times, Entain, Deutsche Bank, Flutter, the Betting and Gaming Council, chief executives and 90 Labour MPs

Duty	Today	Already scheduled	On the table for October 28
Machine games duty	Bands of 5%, 20% and 25%	No change	40% on higher-stakes machines in betting shops, bingo halls, arcades and casinos
Remote gaming duty (online casino)	40%, from 21% before April 2026	No change	No proposal reported
General betting duty, online	15%	25% from April 2027	The industry asks for a pause

• The last rise: HMRC collected £590m of remote gaming duty in July, against £283m a year earlier, after the rate rose to 40% from 21%. A rate 90% higher brought in 108% more tax, which implies the taxed online casino base grew about 9% y/y (estimate from public figures).

Quicktake

• Flutter: Deutsche Bank puts its cost from a machine duty rise at under 1% of group EBITDA, because its UK shops are a small part of the group. Richard Clarke, who runs Paddy Power and Betfair, told iGaming Business on October 8: “We’re expecting a £500 million impact from next year.” Third-quarter results come November 4.
• Entain, Q3: group revenue rose 2% y/y and online 3%, or 5% excluding Brazil. UK and Ireland online rose 14% y/y, while Italy fell 6% y/y. Deutsche Bank puts the cost of a machine duty rise at about £100m a year before mitigation, about 10% of Entain’s 2027 EBITDA.
• Allwyn: its €150m buyback ended on October 5, after buying 1.41% of the shares at an average €13.23. The next day the Valea Foundation, top parent of KKCG, Allwyn’s controlling shareholder, started buying. It spent €38.5m in seven sessions to October 14, at prices rising from €11.56 to €12.41. Allwyn pays a €0.20 interim distribution, with a scrip option, and reports the third quarter on November 19.
• Bally’s Intralot: no company news in the window. Its largest business is UK online casino, already taxed at 40% since April, so the Budget is its next event.
• Lottomatica and Cirsa signed their merger plan on October 8, on the September 2 terms: 0.668 new Lottomatica shares per Cirsa share, leaving Blackstone with about 24%. Lottomatica pays about 6 times Cirsa’s 2026 EBITDA with shares valued at about 8 times its own (estimate from public figures). The combined group plans to return €744m to shareholders after closing, by special dividend, buyback or both. Shareholders vote November 23, and closing is expected in the second quarter of 2027.
• Italy’s draft budget books about €0.7bn a year from gaming in 2027 and 2028 and €0.5bn in 2029. The measures have not been published. Broker Intermonte, via Websim, expects a paid one-year extension of retail concessions. That would hit Lottomatica and Flutter’s Sisal.

Brazil: licences end on runoff day

• Federal betting licences end on October 25, the day of the presidential runoff. Flávio Bolsonaro led the October 4 first round with about 47% to President Lula’s 45%. Eurobank Equities notes that he opposes a blanket ban and favours regulated sports betting. Supreme Court Justice Luiz Fux is expected to rule on the ban only after the vote.
• Lawmakers filed 97 amendments to the decree, of which 92 remain. The largest group would reopen sports betting and keep online casinos banned.

Company	What the ban costs
Allwyn	Betano, 36.75% owned through Kaizen, is about 6% to 7% of Allwyn’s EBITDA (JP Morgan). Allwyn’s 2026 margin guidance of about 37% “would no longer apply” if the ban holds
Flutter	About $70m of revenue and $20m of adjusted EBITDA if the ban runs to year-end
Entain	Brazil was expected to be about 5% of 2026 online revenue. Its guidance assumes the ban holds

Briefs

• Ireland: the October 6 budget held betting duty at 2% for 2027.
• EU: a proposed online gambling levy was left out of the draft 2028-34 EU budget.

So what?

• What changed: both sides of the UK tax fight put numbers on the table before October 28. Allwyn’s controlling shareholder started buying as the company buyback ended. Italy booked about €0.7bn a year from gaming.
• What was priced: Entain is down 42.1% YTD, Flutter 64.8% and Allwyn 35.6%.
• What to watch: Brazil’s runoff (October 25), the UK Budget (October 28), Flutter’s third quarter (November 4) and Lottomatica’s vote (November 23). A pause in the April 2027 online betting rise would help Flutter and Entain most.

THE LOCAL

US Regional

State, September 2026	Gaming revenue	y/y
Louisiana	$195.5m	+11.8%
Mississippi	$195.6m	+4.5%
Illinois (casinos)	$178.2m	+12.7%

• Churchill Downs is selling nine casinos. Mizuho cut its full-year EBITDA estimate to $1.24bn on October 7, citing new competition in Virginia.
• MGM Springfield: the city is blocking MGM’s sale of the property’s operations to Clairvest, and MGM claims $500m in damages. The property pays VICI about $30m a year in rent.
• Results: Boyd October 22, VICI October 28, Penn November 5.

THE PROJECTS

Global Greenfield & Development Watch

• Wynn Al Marjan, UAE: $5.7bn, opening September 2027, reaffirmed.
• MGM Osaka, Japan: opening autumn 2030. A Kyung Hee University study says it could draw up to KRW2.32tn (US$1.72bn) a year from Korean casinos.
• Japan, round two: Aichi takes proposals until March 23, 2027. The national application window runs May 6 to November 5, 2027.
• Thailand: no change. No casino bill, hearing or timetable has appeared in 2026.

OTHER

Sweepstakes & Skill Games

• Pennsylvania: skill games, slot-like machines in bars and shops, became illegal on October 14 after the state Supreme Court refused to extend a stay. The ban covers an estimated 70,000 terminals. Casinos owned by Penn, Boyd, Caesars and Churchill Downs could gain the play.
• Oklahoma bans sweepstakes casinos from November 1, the 10th state to do so. Stake.us leaves after October 30.

THE NUMBER

MOP744m. The average daily gaming revenue Macau needs from October 12 to 31 to reach the October consensus of MOP777m a day, about MOP24.1bn and flat y/y. October 5 to 11 ran at MOP729m. A print near MOP24.1bn on November 1 would suggest the premium slowdown was temporary. A print near Jefferies’ MOP22.4bn would say fourth-quarter consensus is too high.

THE CALENDAR