Gaming stocks had an eventful week, even as the Roundhill Sports Betting & iGaming ETF’s (NYSE: BETZ) returns during the week (gains of around 2%) were in line with the S&P 500 Index.
With gains of over 21%, Melco Resorts was the best-performing gaming stock in our coverage universe.
The stock was also among the biggest gainers in the preceding week and has now extended its year-to-date gains to nearly 48%. Last week’s rise could be attributed to optimism over strong growth in the Macau market.
On Tuesday, Macau reported a 19% YoY increase in June gaming revenue, which was over twice what analysts were expecting.
As a result, on July 1, JP Morgan Chase & Co. upgraded Melco from a “neutral” rating to an “overweight.” On July 7, Wall Street Zen upgraded the stock from a “hold” rating to a “buy” rating.
Outside Macau, another factor contributing to the surge in share price was Melco’s announcement on Monday that it will open its City of Dreams Sri Lanka resort in early August.
Douyu International Holdings was the second-largest gainer, with the stock adding 18% last week, thanks to an over 10% spike on Friday..
Despite recent gains, the stock is down over 32% for the year and approximately 62% lower than its 52-week high due to concerns over the company’s financial health.
Wynn Resorts gained 14% last week, with the gains primarily attributable to the positive June revenue update from Macau. The stock is now up 22.6% for the year, which, although below BETZ, is well ahead of the broader market.
MGM Resorts also outperformed last week after the update from Macau, gaining more than 11%, which helped it bridge its year-to-date losses and turn positive for the year.
Also, with an 11% growth, Las Vegas Sands rounded out the top beneficiaries of the strong Macau Results.
Bally’s Corporation was among the major gainers last week, with the stock increasing by over 12%.
On Tuesday, Bally’s Corporation shares rose almost 16% after Intralot S.A. announced that it would acquire the company’s International Interactive division for €2.7 billion, paid in a mix of cash and stock.
Despite the influx of cash to support mounting debt, Fitch Ratings placed Bally’s on rating watch negative, indicating Bally’s financial stability may deteriorate because it is selling a profitable unit and becoming more exposed to other risks.
Huya lost a third of its market capitalization last week, continuing its dismal run from the previous two weeks. The stock was quite volatile last week, plummeting 36% on Monday, followed by a rise of over 13% on Tuesday.
Even a generous ex-dividend payout of $1.47 (part of a planned $400 million return to shareholders) could not save the stock from the Monday freefall.
The NYSE applied “due bill” procedures for the dividend, which mandated that those who bought the stock on or before the record date of June 17 but before the payment date of July 1 were eligible for the dividend, even if the trades were settled after July 1. The procedure was implemented due to the high dividend yield compared to the stock price.
While the fat dividend is succor, considering the stock trades at under $2.50, Huya has been a long-term underperformer and trades at just about one-tenth of its all-time high. The tech crackdown in China, coupled with a structural slowdown in the world’s second-biggest economy, has taken a toll on the stock.
Moreover, Huya faces intense competition from Chinese rivals. It has also posted GAAP losses for three consecutive years, which has made the market apprehensive about the company’s future.
Sea Limited was among the other prominent losers, losing 5.7% last week.
The company is not a pure-play gaming company; while its subsidiary, Garena, is in the gaming business, it is a global tech conglomerate with a presence in e-commerce and the fintech space.
The recent decline is attributed to concern over higher competition in the other two businesses, particularly e-commerce, where TikTok Shop is gaining ground.
Additionally, several institutions, including the Teacher Retirement System of Texas and Sumitomo Mitsui Trust, reduced their holdings, which triggered further pressure.
DraftKings stock lost 3.5% last week, which is linked to the passage of President Trump’s signature tax and spending bill, dubbed the One Big Beautiful Big Act (OBBBA).
The Act would raise taxes for the gambling industry, as it mandates a 90% deduction for losses, which could result in gamblers paying taxes even if they don’t make a profit. For context, under current regulations, all gambling losses can be deducted from income up to the total winnings.
“I’ve spoken to many clients, and they’re very concerned,” said Zachary Zimbile, an accountant with experience in gambling regulations. He added, “If you add a 10% penalty, it’s going to eat into a lot of their profit.”
Separately, last week, DraftKings announced the launch of its Responsible Gaming tool named “My Budget Builder,” which lets players set customized limits and receive easy reminders.
Genius Sports also closed in the red last week despite its inclusion in the Russell 3000 Index. Inclusion in any index means that passive funds tracking that index must necessarily buy the stock in the same percentage as the index.
While usually stocks rise on inclusion – and Genius Sports did gain on Monday (the day it was included in the index) – it subsequently pared gains amid concerns over the impact of Trump’s tax bill provisions on gambling revenues.
The 3% decline for the week showcases the recent volatility of the stock. In the past few weeks, it has posted growth followed by declines and vice versa.
Still, Genius Sports’ stock is performing well for the year. It’s up almost 8% over the past month, primarily driven by a new NFL deal, and for the year, it has grown over 18%.
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