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Craps, Roulette and Sports Betting Debuts at Seminole Hard Rock Hotel & Casino Hollywood
Marcellus Osceola Jr., Holly Tiger, Mike Tyson, and Rick Ross place their first bet (John Parra/Getty Images)

The boom in sports gambling and prediction markets is creating “emerging credit risks,” per Bank of America

“For investors this convergence of entertainment and speculative finance signals heightened behavioral risk,” writes BofA.

Luke Kawa

If you’re worried that a society that indulges in speculative activities is indicative of cultural decline, Bank of America has nothing for you.

But if you’re concerned that the proliferation of sports betting and prediction markets is creating new economic risks, you’re singing from their hymnal.

“Easy access and gamified interfaces encourage frequent and impulsive wagers, which can lead to overextension of credit and rising loan defaults,” wrote a team of analysts led by Mihir Bhatia. “For investors this convergence of entertainment and speculative finance signals heightened behavioral risk that could pressure credit quality, increase delinquencies, and impact earnings for issuers and subprime lenders.”

Prediction markets are booming, with much of the growth in activity consisting of what are, in the plainest terms, wagers on sports.

BofA Polymarket growth

The analysts flag that both academic research and recent surveys suggest these activities tend to result in an increased incidence of financial hardship, with young men and lower-income consumers particularly vulnerable. Bread Financial, Upstart Holdings, and One Main Financial are lenders that face “emerging credit risks,” per BofA, as these outfits are more exposed to those segments of the market.

“Beyond individual behavior the nature of these trends could pressure credit quality across portfolios, challenging underwriting models and risk pricing,” they wrote. “Net-net, online betting markets introduce a new risk for lenders, one that they have not had to deal with historically and underwriting models may need to be adapted.”

BofA bettors living osts

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SpaceX gets a wave of bullish ratings from Wall Street analysts

SpaceX received more than a dozen positive analyst calls on Tuesday — including from major Wall Street banks — as they initiate coverage on Elon Musk’s space and AI company.

SpaceX went public on June 12 at a $2.2 trillion valuation, the largest debut in history. While the company hasn’t yet posted a profit, it seems to have convinced Wall Street that it will get there and grow its valuation on the way.

Of the at least 17 analysts that gave a rating on Tuesday, all but one gave it a “buy” or “outperform” rating. MoffettNathanson was "neutral."

The ratings come as SpaceX joined the Nasdaq 100 index, a benchmark tech-heavy basket of companies that underpins millions of portfolios. The inclusion adds built-in demand for the stock from index funds and ETFs.

Still, SpaceX fell more than 5% on Tuesday amid a broader sell-off, and is currently effectively flat from its opening price of $150 a share.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

  • Revenue of $11.0 billion (estimate: $10.8 billion).

  • Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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