Bear Market Erases Two Years of Sports Stocks Gains

The bear market has wiped away more than two years of gains in sports stocks, with the JohnWallStreet Sports Stock Index falling 14% in September despite sports betting companies seeing good trends with the start of the NFL season.

Much of the blame sits with the broad market. The S&P 500 has been in a bear market nearly all of 2022 and is down nearly 25% year-to-date.

“It's been a very painful quarter for the stock market,” Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York, told Reuters. “There's uncertainty about the Fed and their ability to keep the economy moving along as they attack inflation and bring it down to a sustainable level.”

Betting stocks, which perked up in August and appeared to enjoy a strong start to the NFL betting season, were all lower in the month. GeoComply, which provides services to the sports betting industry, said there were 103 million transactions on the league’s opening weekend, well over the 60.1 million of 2021. That should have encouraged Wall Street—it reflects strong business in newly opened betting states—and on a relative basis, most betting stocks didn’t decline as badly as the broad market.

Still, there were a few that saw big sell-offs in September, including Caesars Entertainment, down 25%, and hurt in part by concerns over Asian casino volumes, and Rush Street Interactive, down 24% as its margins were crimped by New York’s high tax rates on sports bets.

Sportico’s JohnWallStreet Sports Stock Index is meant to reflect the state of the sports business. To be included in the index, companies must have a minimum market cap of $50 million and be traded in sufficient volume on an American exchange. The index is rebalanced quarterly, with components dropped and added as needed and the weightings of each stock returned to 2.5% of the index.