Gaming Stocks Face Uneven Outlook Says JP Morgan

Investor confidence across gaming stocks looks fragile heading into earnings season. A new assessment outlines uneven growth, softer demand signals, and regional contrasts shaping expectations across casinos and digital wagering.

Good to Know

• JP Morgan favors DraftKings and Las Vegas Sands ahead of earnings
• Digital betting still offers upside but policy risk weighs heavily
• Macau and Las Vegas show uneven recovery patterns

Digital wagering sits at the center of current investor debate. According to JP Morgan analyst Daniel Politzer, online betting carries the strongest chance to outperform forecasts, even as uncertainty lingers. Slower handle growth, prediction markets, and shifting tax frameworks continue to cloud sentiment as state legislatures remain active.

“Gaming stocks are carrying a lot of baggage and negativity right now,” Politzer wrote, while pointing to DraftKings and Las Vegas Sands as the only names he favored going into fourth quarter earnings.

Recent handle data reinforces that caution. Sports betting activity peaked earlier in the quarter before cooling sharply. Handle growth reached 15 percent in October, eased to 10 percent in November, then slipped by three percent in December. The launch of sports betting in Missouri should lift quarterly handle growth to nine percent, still well below prior momentum.

DraftKings stands apart within that slowdown. Politzer projected 11 percent handle growth for the operator and forecast $300 million in cash flow, roughly 20 percent above Wall Street expectations. FanDuel, by comparison, is expected to post less than half that growth rate, in part due to heavier promotional activity. “On a more positive note, hold was mostly normal,” he wrote, following a weak fourth quarter for sportsbooks.

Regional exposure adds another layer of complexity. Macau gaming revenue rose 15 percent in the most recent quarter and reached about 92 percent of 2019 levels, yet performance varied widely. VIP and high-end play expanded by 45 percent, while mass market growth remained in the mid single digits.

Higher operator spending tied to diversification efforts inside China continues to weigh on expectations. Politzer flagged second half 2025 revenue trends as a concern and described the Macau environment as muted despite headline growth.

Las Vegas Sands stands out among Macau-exposed operators. Politzer projected Macanese cash flow of $626 million for the fourth quarter of 2025, broadly in line with expectations. Singapore performance, however, looks stronger. He forecast a six percent beat that would lift cash flow there to $723 million.

He said improvement in Macau depends on execution, while Singapore would “raise the roof” for future cash flow expectations. By contrast, he projected fourth quarter Macanese cash flow of $292 million for MGM China and $281 million for Wynn Resorts, both far below Sands.

On the Las Vegas Strip, expectations remain restrained. Politzer described investor concern around whether the recent slowdown in leisure demand reflects a cyclical pause or a more lasting shift. Even a cyclical downturn introduces uncertainty around timing for the next expansion phase.

Near-term indicators offer limited clarity. “January is off to a good start, but we likely won’t learn much,” Politzer wrote, noting that the Chinese New Year timing in mid February reduces the value of early trends. Earnings comparisons also grow more difficult as 2026 progresses.

Looking further out, he does not expect relief until easier comparisons arrive in the third quarter of 2026. For the first quarter, he forecast revenue declines of six percent for MGM Resorts International and one percent for Caesars Entertainment, while Wynn should remain flat. Stabilization appears more likely in the second quarter, with two to three percent growth projected for the fourth quarter of 2026.

The investor note also included several price target changes. Politzer lowered targets for Caesars to $37 per share and DraftKings to $41. Wynn dropped by two dollars to $143. Targets moved higher for Churchill Downs to $131, Las Vegas Sands to $71, and Station Casinos to $20, while Sportradar fell by five dollars to $30.

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