Las Vegas and online betting giants face a brutal reality check as major banks slash ratings and investors run for the exits just weeks before companies report fourth-quarter results.
Gaming stocks have plunged into one of their worst starts to a year in recent memory, with even former Wall Street darlings now labeled “dogged by concerns” in fresh analyst notes.
J.P. Morgan Picks Just Two Winners
On January 23, J.P. Morgan gaming analyst Daniel Politzer sent a stark message to clients. After reviewing the entire sector, he downgraded most names and said only two companies deserve investor money right now.
The only stocks Politzer rates Overweight are Las Vegas Sands and DraftKings. Every other major casino and betting name landed on his cautious or sell list.
He wrote that digital gambling companies have the best chance to beat earnings forecasts, yet their shares still trade at deep discounts because of slowing growth and fresh tax threats.
Online Betting Loses Its Shine
Two years ago, investors threw cash at any company tied to sports betting and iGaming. Today the mood has flipped.
Key worries include:
- Handle growth (the total amount bet) has slowed sharply from pandemic peaks
- States hungry for revenue are raising taxes or threatening new ones
- Prediction markets and daily fantasy contests face unclear regulation
- Marketing costs stay sky-high to keep customers
DraftKings remains the lone bright spot for Politzer because it grabs market share and moves toward profit faster than rivals.
Macau Recovery Hits Speed Bump
Casinos that depend on China’s Macau region also lost favor. Las Vegas Sands earns most of its money there, yet even Sands faces fresh doubts.
Operators have spent billions on new hotels, water parks, and concert halls to follow Beijing’s demand for non-gaming attractions. Critics now ask if tourists will fill those venues when gambling money looks shaky.
Politzer warns that Macau gaming revenue could grow more slowly in the second half of 2025 as the diversification push pulls spending away from casino tables.
Share Prices Tell the Story
| Company | Year-to-Date Drop (as of late Jan) | J.P. Morgan Rating |
|---|---|---|
| MGM Resorts | down 18% | Neutral |
| Caesars Entertainment | down 22% | Underweight |
| Wynn Resorts | down 15% | Neutral |
| Penn Entertainment | down 25% | Underweight |
| Las Vegas Sands | down 9% | Overweight |
| DraftKings | down 12% | Overweight |
The table shows how fast sentiment has turned. Regional casino operators suffered the hardest sell-offs after weak holiday reports.
What Happens Next
Fourth-quarter earnings calls start in early February. Investors want clear answers on three big questions.
First, can online betting companies finally turn profitable without huge customer bonuses? Second, will states slap new taxes that eat margins? Third, is the Macau rebound strong enough to cover billions spent on new resorts?
Any stumble on those points could send shares even lower.
The gaming sector once looked unstoppable. Sky-high growth forecasts drove valuations to nosebleed levels in 2021 and 2022. Reality has now crashed the party, and Wall Street refuses to forgive slower growth or rising risk.
For everyday investors, the message rings loud and clear: most casino and betting stocks carry heavy baggage right now. Only a rare few still earn strong buy ratings from top analysts.
The coming earnings season will decide if this brutal sell-off marks a smart reset or the start of a longer fall. One thing feels certain: the easy money days in gaming stocks are gone for now.
