BofA sees betting and finance markets converging

Investing.com -- Bank of America analysts said the boundaries between sports betting, speculation, cryptocurrency, and financial markets are becoming less distinct, which could create long-term growth opportunities for sports betting operators.

The bank said it expects perpetual futures and increased gamification on prediction markets and sportsbooks to be the next areas of innovation in the sector.

Perpetual futures, or perps, are derivatives contracts that allow traders to speculate on an asset’s price without owning the underlying asset. These contracts do not have an expiration date and positions can be held indefinitely. Perps generate over $90 trillion in annual global volume.

Bank of America said the popularity of perpetual futures stems from allowing users to take leveraged positions of 40 to 150 times on Bitcoin and providing simple ways to short assets like cryptocurrency. Binance and Hyperliquid are among the largest global names in perpetual futures.

The Commodity Futures Trading Commission recently implemented rules around perpetual futures, and Kalshi generated more than $100 million of perpetual futures volume in the first 24 hours after launch.

Bank of America said the growth in offshore markets shows retail users like perpetual futures as a speculative tool. If perpetual futures become popular domestically, online sports betting operators could be quick to enter the market. While current use cases for perpetual futures are primarily cryptocurrency and finance markets, there are potential use cases for sports including perpetuals on athletes, teams, and cities.

The bank said the trend of gamification will continue to gain momentum in the coming months and years. Examples include five-minute cryptocurrency up/down markets on DraftKings Predictions and DK Replay, which allows users to bet on where a pitch will land in the batter’s box in an anonymized historical at bat.

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