Navigating the Gaming Industry: Opportunities Amidst Challenges
An Overview of the Current Landscape
As of December 11, 2025, Zacks Equity Research shines a spotlight on Las Vegas Sands Corp. (LVS), Rush Street Interactive, Inc. (RSI), and Brightstar Lottery PLC (BRSL). These companies are navigating a gaming industry grappling with multiple challenges, including strained consumer spending and increasing regulatory complexities. Despite these hurdles, a surge in Macau gaming revenues and a robust appetite for sports betting present both challenges and opportunities in the sector.
The State of the Gaming Industry
The gaming industry, as outlined by Zacks, encompasses entities that operate integrated casinos, hotels, and entertainment resorts. It also includes tech firms developing gaming applications and platforms for sports betting and lotteries. This diverse range of activities underscores the industry’s potential to adjust and adapt to changing market conditions.
Key Challenges Facing the Industry
Consumer Spending Pressure
The current economic climate is characterized by persistent inflation and escalating living costs, leading to "wallet fatigue" among consumers. People are becoming increasingly cautious about discretionary spending, resulting in less frequent visits to casinos and reduced spending per trip. Regional casinos, heavily reliant on local economic conditions, are feeling the brunt of this shift, as patrons prioritize essential entertainment over higher-margin offerings like premium table games.
Regulatory Complexity and Compliance Costs
As states across the U.S. begin to open up to sports betting and iGaming, the regulatory landscape has grown increasingly complex. Different states impose various licensing rules, tax rates, and compliance requirements, squeezing operators’ margins. The high gaming taxes in certain regions only compound the issue, making it challenging for companies to maintain profitability while still focusing on growth and expansion.
The Bright Side: Growth in Macau and Sports Betting
Macau’s Recovery
Despite the challenges, Macau’s casino sector has shown signs of resilience. In November, gross gaming revenues were up by 14.4% year-over-year, demonstrating that underlying demand, particularly in the mass-market segment, remains robust. This resurgence underscores a steady recovery trend that could benefit companies operating in the region.
Sports Betting Boom
The legalization of sports betting across various states, including New Jersey and Illinois, is a major growth driver. Bettors now enjoy the convenience of placing wagers through digital platforms, which continues to expand engagement and revenue for companies like DraftKings and FanDuel. This facet of the industry is evolving rapidly, providing lucrative avenues for existing operators and new entrants alike.
Zacks Industry Rank and Market Performance
The Zacks Gaming industry currently holds a rank of #178, placing it in the bottom 26% of over 243 sectors. This ranking, derived from the average Zacks Rank of member stocks, indicates a less-than-ideal outlook for short-term prospects. The industry’s performance has lagged, but there are notable exceptions among individual stocks.
Performance Compared to the S&P 500
In the past year, the Zacks Gaming industry has seen a modest rise of 7.2%, underperforming the S&P 500’s growth of 15.7%. Nevertheless, the industry’s trajectory has outpaced the broader Zacks Consumer Discretionary sector, which declined by 3.4% during the same timeframe.
Valuation Metrics: A Look at EV/EBITDA
The heavily leveraged nature of gaming companies makes the EV/EBITDA ratio a more meaningful metric for valuation. Currently, the industry maintains a trailing 12-month EV/EBITDA of 18.64, which aligns closely with the S&P 500. Historical trading values for the industry have ranged from a high of 28.46X to a low of 14.16X, with a median of 18.54X over the past three years.
Spotlight on Promising Stocks
Las Vegas Sands (LVS)
Las Vegas Sands benefits from strong travel demand and improving operating conditions, especially in Macau and Singapore. The company has reported a notable upswing, fortified by investments in customer engagement and a fully upgraded suite product. LVS has seen a 22% increase in its shares over the past year, with 2026 earnings estimates climbing 10.1% to $3.15.
Rush Street Interactive (RSI)
This company is experiencing robust growth, marked by a 20% year-over-year revenue increase. RSI has consistently demonstrated strong player metrics, with a 46% year-over-year surge in online casino active users. Shares have risen by 38.3% within the last year, with earnings estimates for 2026 seeing a 14.3% increase to 48 cents.
Brightstar Lottery (BRSL)
After streamlining its focus post-IGT Gaming divestiture, Brightstar Lottery has strengthened its balance sheet and enhanced shareholder returns. The company is also witnessing improved same-store sales and a more optimistic growth outlook, reflected in a 5% increase in 2026 earnings estimates to 84 cents. Although shares have decreased by 19.9% in the last year, the long-term growth potential remains compelling.
The Path Forward
As the gaming industry navigates this complex landscape, investors should keep a close eye on both challenges and opportunities. Despite current headwinds, companies like Las Vegas Sands, Rush Street Interactive, and Brightstar Lottery are demonstrating resilience and adaptability amid evolving market dynamics.