- Online casino operations have not been seeing high success on the NASDAQ.
- This could be attributed to retail casinos reopening.
- Online gambling has also been proven to be far from profitable for major operations.
NEW YORK – Online gambling peaked in 2020 during the pandemic, leading to many iGaming investors going all in on stocks for gaming corporations. The trend, however, has seemed to end as online gambling stocks continue too tank.
This could be attributed to a few things. Mainly, the reopening of retail casinos has heavily affected the market. While online casinos were the main way players were able to gamble in 2020, the reopening of operations have shown that physical casinos are still the primary choice by many gamblers.
Some entities have reported growth, however, with their USA online gambling increasing in value steadily. Even so, the overall market has some investors concerned going forward.
Online Gambling Tanks On NASDAQ
Penn National Gaming, Golden Nugget Online Gaming (GNOG) DraftKings, and Rush Street Interactive (RSI) have all seen a steady decline in their stock prices in 2021.
DraftKings in particular saw a major boom in 2020 and became the first publicly traded pure-play company in the U.S. and is currently still the biggest.
While their Q1 report shows overall increases in revenue and they have exceeded initial expectations, their stock prices continue to plummet.
Examining the companies report, we can see that while quarterly revenue has increased the sales, general, and administrative expenses (SG&A) far exceed revenue which has led to overall losses in profit.
Companies naturally operate at a loss during the early stages of operation, and DraftKings has been public for only a year, however, this revelation has investors jumping ship, steadily lowering the overall stock value of the company.
With more players going to retail casino operations is a part of the reason for the decline, looking closer the true problem is that online casinos are not as profitable compared to the physical operation.
This is something to pay attention to when established casino brands like MGM Resorts, Wynn Resorts, and Las Vegas Sands earnings reports release.
These operations have the strong cash backing from their retail operation that they can use to back their online casinos, ultimately giving them an edge over other operations like DraftKings and RSI.