The Roundhill Sports Betting & iGaming ETF, which includes a variety of gaming companies, ended last week on a positive note, despite a 1.4% drop in the S&P 500 Index. This ETF, known by its ticker BETZ, has surpassed the general market trend for the past two weeks, although it remains behind in year-to-date performance.
Among the notable gainers last week was Robinhood Markets, which saw its stock rise by 13.15%, reducing its year-to-date losses to below 4.5%. This gain was primarily driven by positive sentiment surrounding its cryptocurrency trading segment rather than advancements in its prediction markets. At a crypto summit held at the White House, former President Donald Trump supported the federal Clarity Act to create a consistent regulatory standard for digital assets.
Investor confidence grew further following news regarding the SEC’s proposed "Regulation Crypto Assets" framework. This initiative aims to establish a unified national approach to tokenized contracts, potentially allowing Robinhood to enhance its offerings in tokenization and 24/7 trading.
Cryptocurrency trading has faced challenges for Robinhood in recent quarters; however, there are indicators of a rebound in the digital assets market after the White House efforts. Similarly, Coinbase reported significant gains last week, with its stock value rising as Bitcoin approached $80,000, marking its most successful week in three years.
Evolution Ab experienced an impressive stock increase of 8.90%, lifting its year-to-date growth to 30%. The investment bank ABG Sundal Collier upgraded Evolution’s stock to a “buy” and increased the target price from SEK 675 to SEK 1,000, highlighting robust recovery and growth. Furthermore, a top shareholder, Candle Lake Limited, which is controlled by U.S. investor Kenneth Dart, crossed the 30% voting threshold, which has initiated a mandatory cash offer for shares. Candle Lake clarified that it does not intend to acquire the entire company, describing its stake as a long-term financial investment in a well-managed entity.
The Rank Group Plc saw a 5.81% rise in its shares last week, building on positive momentum from the week before when it reported underlying profits of £78.6 million and noted that its digital segment had helped mitigate the adverse impact of a significant 40% duty in the UK.
In contrast, Bally’s Corporation faced substantial losses of 26.88% last week, marking the largest drop among gaming stocks in the report. In its quarterly financial disclosure to the SEC, Bally’s expressed concerns regarding its ability to meet certain debt leverage and liquidity conditions of its revolving credit facility, citing “substantial doubt” about its capacity to continue as a going concern. To address these challenges, the company is exploring various financing options, including asset sales and debt financing, while acknowledging the uncertainty associated with these strategies.
Bally’s previously had a troubled balance sheet, leading to a downgrade from Moody’s regarding its Corporate Family Rating due to elevated debt-to-EBITDA ratios. Following this warning, analysts from major firms adjusted their outlooks, with Truist reducing its price target from $15 to $10 and Macquarie lowering its estimate from $13 to $11. Barclays further decreased its target from $8 to $7, maintaining its “underweight” rating on the stock.
Corsair Gaming saw its stock decrease by 15.86% after experiencing volatility this year. Despite still being up by 84% year-to-date, it faced profit-taking following a 35% rise the previous week after the strong Q2 earnings report. Goldman Sachs initiated coverage on Corsair with a Sell rating and an $11 price target, leading to concerns about future performance due to optimistic expectations surrounding its AI initiatives.
Grandstand Limited also struggled, with shares down 14.04% last week after previously gaining 20% based on its Q2 earnings. While it reaffirmed a full-year revenue guidance of $165-$170 million, actual revenue fell by 5%. Formerly known as Gambling.com, the company recently changed its name following diversification efforts.
In broader industry news, Florida’s Attorney General James Uthmeier has filed lawsuits against major sweepstakes casino operators VGW and Stake, along with payment processors. Additionally, Polymarket is trialing multi-leg parlay-type contracts on its regulated U.S. exchange as it grows within the prediction market sector.
The CFTC convened its inaugural Innovation Advisory Committee last week to discuss regulations surrounding prediction markets, attracting the attention of notable executives, including from Coinbase and Robinhood. Tensions arose during the meeting, particularly between CME Group’s CEO Terry Duffy and Kalshi, with Duffy criticizing self-certification processes and claiming inadequacies in regulatory compliance.
The CFTC Chair Michael Selig criticized state interventions, asserting that regulatory jurisdiction over event contracts belongs exclusively to the CFTC. This situation reflects a broader struggle between federal and state authorities over prediction market regulation. Another development in the global landscape saw South Korea block prediction market platforms, marking it as a growing trend for countries imposing restrictions. Meanwhile, Australia is advancing gambling reforms, including measures aimed at limiting online gambling advertisements, highlighting a global emphasis on stringent advertising standards in the gambling industry.
