Gaming Stocks Rally on Prediction Market Momentum and Analyst Upgrades as World Cup Volume Accelerates

Gaming stocks posted strong gains last week. The Roundhill Sports Betting & iGaming ETF soared over 7%, narrowing its year-to-date losses to about 4%. While it still trails the S&P 500 Index, the performance gap has narrowed noticeably in recent weeks.

This movement reflects improving sentiment tied to regulatory clarity, prediction market growth, and specific company catalysts. From an operator perspective after eighteen years across iGaming and sportsbook operations, these shifts matter because they directly influence how platforms price risk, allocate capital, and chase new revenue lines.

DraftKings Leads Gainers on Prediction Market Growth Signals

DraftKings (NYSE: DKNG) climbed +16.33%, trimming its year-to-date losses to 16%. The main driver was a regulatory filing that showed preliminary 24% month-on-month growth in annualized consumer trading volume on DraftKings Predictions.

Analyst coverage turned more positive. TD Cowen named it its top small/mid-cap idea with a $30 price target. The firm cited the sports betting platform inflecting toward durable profitability driven by product depth, structural hold, and operating leverage.

Morgan Stanley kept its Overweight rating and $39 price target. It models the prediction market platform adding $50 million in revenue in fiscal 2026 before reaching $240 million in fiscal 2027. The brokerage said current valuation does not reflect this growth.

Jefferies became incrementally more constructive after a fireside chat with CEO Jason Robins in London. Separately, Macquarie analyst Chad Beynon highlighted potential global wagers at this year’s FIFA World Cup rising to a record $50 billion from $35 billion in 2022.

These upgrades matter. In my experience across European regulated markets, operators price regulatory and product tailwinds faster than consensus models often assume.

Genius Sports and Rush Street Interactive Ride Data and Index Momentum

Genius Sports (NYSE: GENI) rose +15.51%. The gains trace to sponsorship agreements with LIGA MX and Polymarket for the U.S. territory. Polymarket becomes the official and exclusive prediction market partner for LIGA MX in the U.S.

Genius Sports supplies official LIGA MX data to Polymarket to create and settle sports prediction market contracts. It also handles integrity information-sharing services. This positions the company as infrastructure for scaling prediction markets beyond traditional sportsbooks.

Rush Street Interactive (NYSE: RSI) gained +13.24%, pushing its year-to-date gains to 52%. The S&P 500 Dow Jones Indices added it to the S&P SmallCap 600 Index effective June 22, 2026. Inclusion typically triggers buying from passive funds tracking the index.

Rush Street Interactive also applied to the Commodity Futures Trading Commission for designated contract market status. This prepares it to offer event-based trading products and enter the prediction market space.

Both moves highlight how data supply and regulatory positioning create new growth vectors. Prediction market wagers for the 2026 FIFA World Cup already crossed $2 billion across leading platforms. Analysts estimate total volume on Kalshi and Polymarket could reach $10 billion.

Biggest Losers Reflect AI Skepticism and Macro Pressures

Not every name participated in the rally. Corsair Gaming (NYSE: CRSR) fell -6.44% for the second straight week. The stock had rallied in May on optimism around its AI pivot, including the Corsair PRO portfolio of AI-powered workstations and servers and Model Context Protocol support for Elgato Stream Deck to control AI agents like NVIDIA G-Assist.

Markets now question whether that rally rested on fundamentals or AI-related euphoria. The pullback illustrates a limitation many operators face when chasing adjacent tech narratives without clear near-term revenue proof.

Sea Limited (NYSE: SE) dropped -4.18%, extending its year-to-date decline to 35%. The company cut roughly 8% of Shopee’s global developer headcount, mainly quality assurance roles. Management called it an AI-driven restructuring, yet the move revived concerns about e-commerce competition and growth costs.

Melco Resorts & Entertainment (NYSE: MLCO) eased -3.51%. A Citigroup note warned of the FIFA tournament’s drag on land-based casino traffic. Analyst George Choi pointed to a 17% fall in Macau’s gross gaming revenues during UEFA Euro 2024 and similar dives during the FIFA World Cup in 2018 and UEFA Euro 2016. He expects an even bigger impact this year due to the new format and 104 total matches.

This risk is real for casino operators. Major soccer events divert attention and betting budgets away from floors, especially among Chinese and premium-mass players.

Regulatory Crosscurrents and Broader Industry Signals

The CFTC released a 267-page draft regulation asserting federal jurisdiction over sports event contracts. It classified election and political wagers as contests, not gaming. This stance has drawn sharp pushback from state regulators and tribal governments who view it as bypassing state laws.

Meanwhile, traditional operators face headwinds. The Nevada Gaming Control Board reported Las Vegas Strip casinos posted win revenues of almost $700 million in April, up nearly 7% from the prior year. Yet fiscal year 2025 showed an 81% year-on-year drop in net income.

FanDuel conducted widespread layoffs affecting several hundred employees across software engineering, customer service, business development, social media, and operations. This follows the May departure of CEO Amy Howe and a nearly 50% year-to-date drop in parent Flutter Entertainment stock.

Gambling.com cut 25% of its workforce in May to shift to an AI-first model, targeting $13 million in annualized savings.

These developments show the industry balancing legacy pressures with new prediction market opportunities. The Roundhill Sports Betting & iGaming ETF performance suggests investors are rewarding names tied to the latter.

The Bottom Line

Prediction market volume and analyst conviction are lifting select stocks while traditional casino and e-commerce names lag on execution risks and macro concerns. For gaming executives the signal is clear: data supply partnerships, regulatory applications for event contracts, and World Cup positioning will separate winners from those still anchored to older models. Watch early tournament trading updates and the Federal Reserve meeting this week. A dovish tone could accelerate discretionary rallies; sustained higher rates would keep margin pressure front and center. The next few weeks will test who has built the right infrastructure for this convergence.