Casino and gaming stocks fall amid growing recession worries

The casino sector was jolted on Monday by increased investor anxiety over a recession building in the U.S. The selling pressure followed a Friday’s jobs report, which showed the U.S. unemployment rate unexpectedly climbing to 4.3%, as well as some cautious earnings reports from the consumer sector. While an interest rate cut by the Federal Reserve would make it less expensive for U.S. households to borrow money and give them some debt payment relief, the impact on consumer discretionary spending could take several months or longer to be felt, warned economists.

Notable decliners in late morning action included Caesars Entertainment (CZR) -7.8%, Rush Street Interactive (RSI) -6.7%, Red Rock Resorts (RRR) -6.6%, PENN Entertainment (PENN) -6.1%, Wynn Resorts (WYNN) -5.3%, Century Casinos (CNTY) -5.2%, Inspired Entertainment (INSE) -5.1%, Golden Entertainment (GDEN) -5.0%, MGM Resorts International (MGM) -4.2%, Monarch Casino & Resort (MCRI) -4.1%, and Churchill Downs (CHDN) -3.7%.

Over the last week, some of the biggest decliners in the broad casino/gaming/sports betting sector are MGM Resorts International (MGM) -21%, Red Rock Resorts (RRR) -17%, DraftKings (DKNG) -17%, Boyd Gaming (BYD) -12%, and International Game Technology (IGT) -11%.

B. Riley Securities is still positive on many casino and gaming stocks. “While macro uncertainty continues to weigh on gaming names, we note most casino/supplier valuations are already trading several turns below historical averages despite reaching new gaming records and a history of sector revenue resilience,” highlighted analyst David Bain. The firm has Buy ratings on Genius Sports (GENI), Golden Entertainment (GDEN), Full House Resorts (FLL), and Gambling.com Group Limited (GAMB).