The COVID-19 omicron variant has introduced new uncertainty into the market. In addition, investors’ interest in the gambling sector seems to have dwindled following the arrest of the Suncity Group CEO. So, against this backdrop, we think it could be wise to avoid gambling stocks Caesars Entertainment (NASDAQ:CZR) and Penn National Gaming (NASDAQ:PENN), given their weak financials. Read on.With increasing legalization and digitization, the gambling industry has been recovering steadily from the worst of the COVID-19 effects from last year. According to a Statista report, the casino and online gambling sector worldwide is expected to reach $230.86 billion this year. This is still below the 2019 level of roughly $265 billion, however.
But current COVID-19 related uncertainties continue to impact the gambling sector. According to Federal Reserve Chairman Jerome Powell, the emergence of the omicron variant poses downside risks to the economy. Furthermore, the CEO of gambling group Suncity Group Holdings Ltd, Alvin Chau, was arrested recently, fostering even more investor pessimism about the sector.
Given this backdrop, we think it could be wise to avoid gambling stocks Caesars Entertainment, Inc. (CZR) and Penn National Gaming, Inc. (PENN) now. They have declined significantly in price over the past month and could continue losing in the near term.