Black Monday Hits Stock Markets but Fails to Sink the Betting Sector

Published: August 7, 2024 | Author: Ron Clarke

On Monday, August 5, stock markets opened the week in significant difficulty, continuing the negative trend from the previous Friday. The Japanese market immediately sent shockwaves worldwide, with Tokyo’s stock exchange dropping over 12%, dragging down all Asian markets, followed by European and American markets, which closed the session with a decline of over 3%, with even worse percentages for technology stocks.

However, Tuesday and Wednesday brought a calmer atmosphere, with more or less consistent rebound attempts across all stock markets, which were successful and at least partially covered Monday’s losses.

The betting sector was also hit hard by the stock market sell-off. The Dow Jones U.S. Gambling Total Stock Market Index lost over 3%, losses then paritally recovered the following day. Not all companies within the index experienced identical paths. Some stocks lost more, others less, and some remained unaffected by the shock. Here are the details:

• Las Vegas Sands, owner of luxury resorts in Las Vegas, Macau, and Singapore, lost 3.7% on Monday, recovering 1.7% the next day.

• Wynn Resorts, known for high-end resorts and casinos such as Wynn Las Vegas and Encore, lost 4.2% on Monday and gained 3.7% on Tuesday.
• MGM Resorts, which owns properties like Bellagio and MGM Grand in Las Vegas, lost 4% on Monday, fully recovering the next day.
• Caesars Entertainment, operator of famous brands like Caesars Palace and Harrah’s, lost 6.9% on Monday and recovered 4.1% on Tuesday.
• Boyd Gaming, focusing on regional casino properties such as Sam’s Town and Borgata in Atlantic City, lost 2% on Monday and recovered 1.5% on Tuesday.
• Red Rock Resorts, operating Station Casinos primarily for Las Vegas locals, lost 3.7% on Monday and rebounded 6% on Tuesday.
• Churchill Downs, best known for the Churchill Downs Racetrack and the Kentucky Derby, lost 3.7% on Monday but only recovered 1.7% on Tuesday.
• DraftKings, a leading operator of daily fantasy sports contests and sports betting, lost 0.7% on Monday and 1.3% on Tuesday.
• Flutter Entertainment, owner of online gaming brands such as Paddy Power and Betfair, lost 3% on Monday and was unable to react the next day, losing an additional 0.3%.
• IGT, a major supplier of gaming machines and lottery systems, lost 1.3% on Monday with no movement the next day.
• Inspired Entertainment, focusing on virtual sports and mobile gaming, experienced a severe drop of 8.3% on Monday and rebounded 3.8% on Tuesday.

On average, these stocks lost about 3.7% and recovered two-thirds of the losses, but the rebound continued on Wednesday, indicating a promising structural recovery for a sector that continues to suffer in the stock market with a negative 1-year balance. The betting sector has, however, shown an ability to generate profits and increase revenues despite challenging market conditions following the Fed’s significant rate hikes, which have reduced consumer spending power.

The relatively contained losses on Black Monday and the subsequent recovery appear to be factors that could support the sector in the coming months, provided the Fed reduces interest rates, increasing consumers’ disposable income amid a general reduction in inflation.