Gambling Stocks Tumbling After Post-COVID Highs

• DraftKings (DKNG), Caesars (CZR), Penn Entertainment (PENN), Bally’s (BALY), and Gambling.com (GAMB) all saw major spikes between 2020-2021.
• Since then, many gambling stocks have fallen in the market, with PENN down nearly 75% from its 5-year high.
• The gambling industry now faces a credibility reset, with cautious sentiment and realistic valuations.

LAS VEGAS – Stocks for major sports betting platforms, including Caesars, DraftKings, Penn, and Bally’s, surged in 2020 and 2021 as investors bet big on the future of legal USA gambling amid popular consumer demand.

Five years later, the gambling sector is in the red, raising eyebrows regarding the status of the market.

• Penn Entertainment has been among the worst performers, with shares falling over 70% since 2021. Its $1.5 billion deal with ESPN to launch ESPN Bet has yet to yield a profitable return.
• Caesars has fallen more than 45% over the past five years, despite an early spike at the beginning of the pandemic. The stock recently closed at just over $22, down from 2021 highs around $120.
• DraftKings is down over 60% since its record-high shares. After a meteoric rise in 2020 (+331%), the company posted a steep decline in 2021 and 2022, and continues to face difficulties in profit.

The pressure was even applied to Gambling.com and other affiliates. Having modest exposure and with the acquisition of Odds Holdings, volatility remains high.

The decline in gambling stocks over the past five years is a result of many factors: high costs, tax pressures, market saturation and drags on discretionary spending

Plus, with legal USA gambling states raising taxes on operators in an over-crowded market, there is little pricing power left for operators.

The gambling sector’s post COVID rally was driven by hype, not fundamentals, and now the market is pricing in reality.