Sportsbooks See Wall Street Losses as Recession Fears Loom

The sports betting industry is having a rough start to the week.

Most sportsbook operators in the US have seen their stocks slide on Monday. The industry has felt the effects of the White House’s controversial trade war, which is setting off fears of a recession. 

Penn Entertainment has felt the most market regression, watching its shares plunge by over 9% on Monday. This comes at a bad time for the massive operators, which are desperately trying to save its failing ESPN Bet platform. 

Flutter Entertainment had the second-worst Monday, declining over 8%. DraftKings followed them, which came out better with a drop of about 5.5%. 

The entire country has seen the markets tumble over the last few days as Americans remain uncertain about the future. With trade wars being escalated with Canada on Wednesday, it doesn’t appear that things will settle down soon.

By comparison, sportsbook operators in Europe have seen markets remain relatively stable. This could help support many operators in the US, but it seems likely that the fallout from the American markets could soon have an impact.

How Would a Recession Affect Problem Gambling?

One problem that hasn’t been discussed during these uncertain financial times is gambling addiction. While most Americans will be ok cutting their spending with sportsbooks if a recession comes, those dealing with problem gambling may not be able to. Addiction can drive people to sink whatever little money they have into gambling, leading to some devastating consequences.

The sports betting industry has actively fought against problem gambling, but a recession could make operators desperate. Advertising laws give sportsbooks a lot of leeway, which they may use to attract bettors during these difficult times. New and improved bonuses and promotions can be promoted across all mediums, making it nearly impossible for those suffering from gambling addiction to avoid them.

Cracking down on industry advertising could help fight this problem, but sports betting is providing states nationwide with millions of dollars in tax revenue. That is money they will need during a recession, which could make some lawmakers hesitate before committing to action that could further cut into the declining tax revenue.