US prediction markets, UK tax hikes shape Jefferies' 2026 gaming view

Jefferies says it remains "selectively positive" on the European gaming sector, as it expects 2026 mood to be dominated by U.S. prediction markets and UK tax ramifications

The emergence of prediction markets is an incremental profit opportunity and a potential accelerator for online sports betting legislation in the U.S., it says

Meanwhile, it expects recent tax hikes in Britain to cause a material market restructuring, leading to greater share concentration and risks of black market leakage

It downgrades Kambi KAMBI.ST to "hold" saying the valuation is "low but lacking catalysts", and pointing to headwinds from customer transitions and slower growth in Brazil

Flutter Entertainment FLTR.L remains Jefferies' top pick, with its prediction market entry presenting an incremental mid-term upside opportunity

The broker also lists Lottomatica LTMC.MI as a top pick, citing its number one position in Italy and potential for a re-rating as it skews towards online growth

Cirsa CIRSA.MC completes the top picks, with Jefferies highlighting its attractive valuation and "unique, fully regulated platform with consistent growth"

It maintains "buy" on Entain ENT.L, Intralot INLOT.AT and Hacksaw HACK.ST, and "hold" on Better Collective BETCO.ST, Evolution EVOG.ST and Playtech PTEC.L