The gaming sector is stuck in one of those annoying stretches where the rest of the market is having a party and gaming stocks are nursing a drink in the corner. The Roundhill Sports Betting and iGaming ETF limped through another weak week, posting essentially flat returns while the S&P 500 surged nearly 1% to fresh record highs. Year-to-date, it gets worse: BETZ is down 7.7% against the benchmark’s 5.6% gain.

Winners and Losers

Rush Street Interactive was the week’s standout performer, posting a remarkable 20% jump following absolutely stellar first quarter results. The company reported revenues of $370.4 million, easily crushing analyst expectations of $330 million, driven largely by a 51% surge in monthly active users. Net income more than doubled to $26.2 million, and management raised full-year guidance to $1.52 billion in revenue with adjusted EBITDA expected to reach $230 million to $250 million. That’s a 50% to 63% increase from current levels. Multiple brokerages including Macquarie and Oppenheimer subsequently lifted their price targets. RSI is now up over 45% on the year.

Playtech also showed some backbone, adding roughly 30% year-to-date despite last week’s 8% pullback, which analysts attributed to profit-taking. The software and services provider impressed investors with 126% revenue growth in North America during Q4, and management signalled confidence that expansion in regulated markets would offset the impact of UK tax increases.

Gambling.com posted a 10% weekly gain as investors await first quarter earnings scheduled for mid-May. The affiliate business is still down 26% on the year, but fresh leadership taking the helm later this month is generating optimism around how they’ll deal with Google’s ongoing SEO algorithm changes.

The Struggle Is Real

Robinhood delivered the week’s worst performance, dropping double digits following disappointing first quarter numbers. Despite strong growth in its core trading and nascent prediction markets business, a 47% collapse in cryptocurrency revenues sent overall results below expectations. The stock has surrendered roughly a third of its value since January, though management remains bullish on the regulated prediction markets opportunity ahead.

Light and Wonder continued its dismal run, falling 5% to extend year-to-date losses to 27%. Even with a Macquarie upgrade and compelling valuation metrics, the stock just can’t gain meaningful traction.

Playtech also experienced an 8% decline, though analysts suggest this represents healthy profit-taking rather than fundamental concerns.

Emerging Market Headwinds

India’s formal enforcement of its new Online Gaming Rules, effective May 1, effectively eliminated long-standing legal protections for skill-based gaming. The blanket ban on wagering in online games marks a significant regulatory shift for operators with Indian exposure, and the market is still digesting the implications across the sector.

Despite the sector’s underperformance this year, selective opportunities remain. Rush Street’s explosive growth and improving profitability demonstrates that execution still matters, whilst Playtech’s geographic diversification is proving its worth. The real challenge for investors is distinguishing genuine operational momentum from the broader headwinds that appear to be weighing on gaming stocks as a group.

What the team thinks

Philippa Ashworth says:

Carl’s identified a real divergence, but I’d push back on the “frustrating” framing—this underperformance actually reflects the sector’s transition from pandemic-era speculation to sustainable unit economics, where operators are being rewarded on profitability rather than top-line growth alone. The real story isn’t that gaming stocks are lagging; it’s that the market is finally maturing enough to differentiate between disciplined operators with genuine margins and the old growth-at-all-costs narrative. That selective pressure might feel weak in the aggregate, but it’s exactly what the industry needed to attract institutional capital on fundamentals rather than hype.