On Tuesday, S3 Partners, a financial analytics firm, reported that many short sellers have begun a rapid sell of bets against casino and gaming stocks. The move comes as land-based operations in Nevada and Louisiana, and more to come, have started on their path back to normality.
DraftKings, a company whose valuation has suggested the potential for crypto igaming growth, was one of the companies which saw the biggest price spike as investors covered their existing positions. In fact, the stock hit an intraday record this Tuesday before falling away later in the day. Other gaming and casino stocks, including Churchill Downs and Boyd Gaming realised similar moves on a smaller scale.
The recent reversal of investor sentiment comes after the sector's stocks saw major hits in March following the almost universal shut down of land-based casino operations. The US was not the only region to be hit by the COVID-19 pandemic, with Macau facing similar struggles over the last couple of months.
S3's managing director, Ihor Dusaniwsky, commented in the report:
“Short squeezes in several of these stocks may occur, specifically those stocks with recent price spikes such as DraftKings, Scientific Games Corp, Boyd Gaming Corp, MGM Mirage and Wynn Resorts and year-long losses such as Churchill Downs.”
Sportsbooks and casino operations in digital and land-based sectors will be rejoicing as things turn back to the way they were earlier in the year. Both sectors have faced significant challenges with casinos having to close their doors and sportsbooks having virtually nothing to offer their players. But with some major sports already having returned, including the Bundesliga and UK horse racing, it's expected that punters will return to their original point of betting.
Saying that, crypto casinos including BitCasino and CloudBet have taken the time to bolster their existing sports betting offerings to appeal to a potential new audience who had lost their first choice betting destinations. Whether these players, who have jumped from land-based casinos to the crypto igaming sector, will remain is still to be seen. There is no doubt, though, that crypto operators have made their move to gaining a larger market share in future.