For years, the story surrounding investments in the gambling sector was straightforward: increased betting meant greater growth opportunities. This narrative is now facing challenges.
A stark indicator of this trend is Entain's exit from the FTSE 100, which reflects the broader decline in gambling stocks in both Europe and the United States. Despite posting strong first-half growth numbers, Entain saw its shares plummet in value over the past year.
During the six months ending in June, the online net gaming revenue for Entain rose 7% in constant currency. The company's revenue in Britain and Ireland surged by 13%, and it sustained its full-year online net gaming revenue growth forecast of 5% to 7%. So why the ongoing pressure on its stock price?
The answer lies in a shift in market valuation. Investors are no longer focused solely on future growth but are now emphasizing current profitability, cash flow, and manageable regulatory challenges. Ed Birkin, managing director at H2 Gambling Capital, notes that the prolonged downturn in gambling stock valuations goes beyond adjustments in earnings forecasts.
"The industry share price declines have been much more severe than the cut to earnings projections," Birkin said, indicating that while some fundamental growth drivers may be weakening, the primary cause of share price declines is investor perceptions, intertwined with weaker fundamentals.
Entain's situation is part of a larger trend. The company's fall came on the heels of a more prominent move by Flutter Entertainment, which transitioned its main trading platform from London to New York in January 2024. Flutter's market capitalization soared from around $36 billion at its New York debut to approximately $50 billion by June of the following year, only to then drop sharply as investor expectations were recalibrated.
In the second quarter of 2026, Flutter’s revenue in the US dipped 6% to $1.683 billion, and its sportsbook revenue decreased by 15%. Despite these declines, FanDuel maintained its lead as the top US sportsbook, capturing a 39% share of the country’s gross gaming revenue.
Ben Robinson, managing partner at Corfai, suggests that while Flutter's US listing initially improved capital access, the core issues arose later. “We now see which side of the K-shaped market Flutter has landed on, as capital is increasingly funneled into a narrow band of tech stocks, leaving others struggling.”
The crux of the decline is the transformation in how growth potential is viewed. Frank Fantini, founder of Eilers-Fantini, attributes the downturn to a trend predating the pandemic, pointing out that both new market opportunities and project initiations had already been stalling before COVID-19.
"The decline in gaming began earlier than that with the slowdown in new jurisdictions and new projects," Fantini said, emphasizing the shift in the US land-based casino market towards maturity and a decreasing number of new opportunities.
Online gambling was supposed to provide a fresh avenue for expansion, particularly as legal sports betting started to open up. However, this growth has not materialized as quickly as anticipated due to increased taxes and competition, alongside recent market corrections affecting growth-oriented tech and internet stocks, according to Chad Beynon, head of US research at Macquarie Capital.
As the expectations for future earnings come under scrutiny, companies focused on sports betting have faced particularly tough times. In contrast, firms like Rush Street Interactive and Super Group, which focus more on iGaming, have generally fared better due to stronger operational performance and profitability.
Prediction markets have also emerged as a significant wildcard in US sports betting, as estimated by the American Gaming Association. They predict American bettors will legally wager about $29.5 billion in regulated commercial sportsbooks during the upcoming 2026 NFL season.
Robinson believes these prediction markets represent a fundamental shift. Rather than simply acting as competitors, they are reshaping the anticipated peak of sportsbook revenues. Companies such as Kalshi, Robinhood, and Crypto.com are now vying for a share of the betting activity traditionally dominated by sportsbooks.
While the presence of these new entrants does not automatically spell the end for sportsbook revenues, it stirs doubts about future growth, reflected in declining valuations. And now, sportsbooks themselves are entering the prediction market arena, with DraftKings leading the charge and Flutter ramping up its efforts as well. This trend could provide new revenue streams but demands investment at a time when shareholders seek tangible returns. For instance, Flutter continues to invest in its FanDuel Predicts platform amid declining adjusted EBITDA.
In the UK, Entain grapples with a different set of issues, including tax burdens, debt levels, and investor confidence. The company disclosed around £3.6 billion in net debt by the end of June, with its online underlying EBITDA down 5% despite a 7% increase in net gaming revenue.
A steep tax increase imposed by the UK government from 1 April expanded the Remote Gaming Duty from 21% to 40%. Following in 2027, a 25% General Betting Duty will be introduced for remote betting, excluding wagers on UK horse racing.
Entain reported that the increased Remote Gaming Duty reduced its first-half EBITDA by £56 million. While operators in Britain face escalating taxes and regulatory challenges, US firms are wrestling with fierce competition, leading both regions to affect the stock values of the same companies.
In response to its fiscal struggles, Entain plans to simplify its operations, having agreed to sell a 20% stake in Entain CEE for €425 million. The proceeds aim to decrease debt and potentially return excess capital to shareholders subject to leverage goals.
This strategy positions the company to emphasize cash generation and debt reduction over rapid expansion.
Examining four major players—Entain, Flutter, DraftKings, and MGM Resorts International—reveals that the gambling industry should not necessarily be viewed as a monolithic entity. Flutter holds a robust online position, but its share price has dropped significantly from $282.33 on 18 September 2025 to $89.56 a year later, corresponding to a market valuation of $15.54 billion.
FanDuel remains the leading US sportsbook, and Flutter's international branches provide vital growth, but investors are increasingly cautious about future earnings potential as the market matures. DraftKings, on the other hand, dropped from $43.30 to $21.75 during the same timeframe, with analysts suggesting its operational prospects could improve if it successfully translates customer growth into profitability. Its entry into prediction markets could become an additional competitive advantage.
MGM Resorts International distinguishes itself with diverse offerings—casinos in Las Vegas and regional locations, along with substantial property assets, which has led to a 5% increase in its share price over the past year, now at $37.81.
Beynon notes that MGM provides a diversified investment proposal through BetMGM and its real estate holdings, lowering dependence on online sports betting.
Entain occupies a position between these models. It has solid international reach and a valuable stake in BetMGM, yet it faces heavy debt and considerable exposure to UK tax policies, along with price competition in European markets.
Analysts generally converge on the idea that while the gambling market is not poised for collapse, it is evolving. Operators continue to generate profits, and new products are emerging despite the ongoing stock decrease.
The shift in shareholder expectations is evident; they now prioritize immediate returns over potential long-term growth. Fantini points to successful land-based companies like Red Rock Resorts and Monarch Casino as examples that still attract investment due to rational growth trajectories and effective management.
As the industry navigates the challenges of London’s tightening market, Entain’s exit from the FTSE 100 and Flutter’s shift to New York illustrate broader trends, suggesting that changing listings may not alleviate the underlying pressures. The key transformation lies in the growing demand for verifiable earnings now, rather than speculative future profits.
