Light & Wonder’s chief Matt Wilson laid out a pretty sobering picture of where the gambling industry is headed. Speaking at the Nevada Society of Certified Public Accountants Gaming Conference this week at Circa Las Vegas, he flagged prediction markets as an emerging threat that operators simply can’t ignore.

Wilson painted a stark portrait of a bifurcated market. Premium properties like Wynn, ARIA, and Bellagio are thriving with record profits. Lower-tier Strip casinos? They’re struggling to keep pace. The reason, according to Wilson, is straightforward enough: we’re living in a K-shaped economy where wealthy players keep spending despite inflation and rising living costs, while lower-income groups face mounting financial pressure.

The iGaming Miscalculation

But here’s where things get uncomfortable. Wilson made a candid admission about Light & Wonder’s botched forecast on regulated iGaming expansion. Back in 2022, the company set an ambitious target: grow EBITDA from 900 million to 1.4 billion by 2025, banking on three major states launching iGaming in that window. Not one has materialized. Only seven states offer regulated iGaming today, and that glacial pace has thrown a wrench into long-term planning across the entire sector.

The Prediction Market Problem

Wilson’s real concern, though, centres on prediction markets. Platforms like Kalshi and Polymarket have attracted valuations that dwarf DraftKings and FanDuel. Over the past six months, growth has accelerated sharply. And Wilson isn’t mincing words about what’s happening: this money is coming straight out of players’ traditional gambling budgets.

Light & Wonder doesn’t directly compete in prediction markets, but the company watches the space with obvious unease. Wilson made his argument clear: the industry needs to coordinate on understanding the model’s expansion and potentially pushing back. He also suggested prediction markets sit uncomfortably close to regulated gambling, despite what the platforms claim.

Interestingly, Light & Wonder isn’t alone in wanting tighter oversight. Agricultural organisations have recently urged the CFTC to examine prediction markets tied to commodity prices, citing real risks to traditional futures trading.

Bottom line: operators need to adapt to a slower iGaming landscape while keeping a close eye on an emerging competitor that’s moving far faster than anyone saw coming.

What the team thinks

CARL MITCHELL: Wilson’s warning about prediction markets is spot on, but I’d argue the real issue isn’t the markets themselves, it’s that operators have gotten complacent. The bifurcation he describes mirrors what we’ve seen in the UK for years, where innovation separates the sharp operators from the dinosaurs still relying on outdated player acquisition models.

SHEENA McALLISTER: Carl makes a fair point, though I’d add that prediction markets exist in a regulatory grey zone that keeps compliance teams up at night. The UKGC hasn’t issued clear guidance on whether these fall under gambling jurisdiction, and that uncertainty is creating a two-tier system where compliant operators are handicapped against unregulated rivals.

CARL MITCHELL: Exactly right, and that’s where the real threat lies. Premium operators like those Wilson mentioned can absorb regulatory costs and still turn profits, but mid-market casinos get squeezed from both sides. They can’t compete on luxury amenities and they’re being undercut by agile, unregulated platforms offering prediction markets without compliance overhead.

SHEENA McALLISTER: Which brings us back to regulation needing to move faster. The UKGC and equivalent bodies abroad need to establish clear rules around prediction markets before they become an enforcement nightmare. A level playing field actually helps quality operators more than it hurts them, because it removes the competitive advantage of operating in the shadows.