Gambling shares pummelled amid wider stock market sell-off
DraftKings, Super Group and Penn National Gaming suffer double-digit falls as investors run for cover
Shares in leading gambling companies on both sides of the Atlantic suffered sharp declines yesterday as spiralling inflation and recession fears spooked investors.
The biggest faller on the day was DraftKings as the Nasdaq-listed operator’s stock tumbled 15% to close trading at $11.03.
There were also significant sell-offs involving Betway parent company Super Group (down 13%), Rush Street Interactive (down 9.8%) and Genus Sports (down 12.6%).
Meanwhile, shares in FTSE 100 operators Flutter Entrainment and Entain slid 4.1% and 4.8% respectively.
The major US casino resort operators also slumped, with the biggest loser being Penn National Gaming, with a 11.5% decline.
The falls mirrored the wider equities markets as the FTSE 100 shed 1.5%, while America’s Dow Jones, Nasdaq and S&P 500 all plunged.
The sea of red on traders’ screens was sparked by the prospect of a recession and central banks raising interest rates to curb rampant inflation, which is running at above 9% in the UK.
In the US, figures revealed recently that prices have risen 8.6% annually, above the 8.3% Wall Street had been anticipating.
As well as equities, investors continue to dump cyptocurrencies; bitcoin was down 18% yesterday to around $19,270 while ether crashed below $1,000.
This year has so far proved to be a difficult period for gambling stocks, particularly for US online operators as investors and analysts question the path to profitability for certain firms.
DraftKings, in particular, has endured a torrid period of late and is down almost 80% in the past year.
The Boston-based operator’s market cap stands at under $5bn, a far cry from when DraftKings was valued at more than $30bn back in 2020, six months after its float following a SPAC merger.
Meanwhile, Rush Street Interactive has lost two-thirds of its value in the past 12 months and now has a market cap under $1bn.
Entain, which has agreed to acquire Dutch operator BetCity, is now valued at £7.9bn following a 26% slump in its share price in the past year.
It means Entain is now valued at less than the £8.1bn offer MGM Resorts tabled for its US JV partner in January 2021, an offer Entain rejected as it undervalued its business.