Sports betting stocks are getting battered today despite promising news for New York gambling fans this weekend. On Saturday, Jan. 8, BetRivers (NYSE:RSI), Caesars (NASDAQ:CZR), DraftKings (NASDAQ:DKNG) and FanDuel (OTCMKTS:PDYPY) each launched mobile New York sportsbooks in the Empire state. Even in consideration of this recent expansion, all of the stocks are down so far on the day.
What’s going on with sports betting stocks today?
New York is considered a big market for gambling companies. New Jersey has been the uncontested betting king for years now, which is largely attributable to New Yorkers crossing the state lines to place over-the-phone bets. But no longer. With estimates of around $1 billion in eventual annual revenue, New York predicts it will raise $500 million in annual tax revenue from online sports betting by 2025. And, it will save many residents an untimely car ride in the process.
In April, New York State approved its budget, which included a bill legalizing online sports betting. This was followed up on in November, when New York’s Gaming Commission approved sports betting licenses for nine operators. As such, Bally’s (NYSE:BALY), MGM (NYSE:MGM), BetMGM, Wynn (NASDAQ:WYNN), Resorts World and PointsBet are also conditionally licensed pending final approval.
Sports gambling apps are clearly the big winners today, yet the stocks paint a different picture. What’s bringing gaming mainstays down today?
Sports Betting Stocks Fumble as Covid Concerns Outweigh Promising NY Expansion
RSI, PDYPY, CZR and DKNG are down 6.49%, 1.96%, 4.38% and 8.59%, respectively, so far today. The culprit behind the drop? Likely a combination of worsening omicron concerns, in addition to bearish expectations from the Federal Reserve.
The Covid-19 pandemic has been a constant strain on casino stocks. Despite a promising summer that saw many casino stocks surge, it seems the industry is still vulnerable. With the omicron variant continuing to gain traction nationwide, the promising development has clearly been overshadowed. Several Las Vegas-based conventions have even been canceled due to the variant’s rampage.
Additionally, this morning, investment banking titan Goldman Sachs (NYSE:GS) predicted the Fed will likely increase interest rates four times this year. That’s one more than previously estimated. The news has immediately brought a wave of bearish energy to the markets. The S&P 500, Dow Jones Industrial Average and Nasdaq are each down more than 1% to start the week.
Even cryptocurrencies couldn’t avoid the onslaught. Indeed, 18 of the 20 largest cryptos by market capitalization are in the red today, likely in reaction to the news.
As such, even as promising as the New York gambling expansion is, today’s pullback shouldn’t come as much of a surprise to market watchers.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.