3 Gaming Stocks Worth Buying Despite Industry Headwinds

Industry Description

The Zacks Gaming industry includes companies that own and operate integrated casinos, hotels and entertainment resorts. Some industry players also deliver technology products and services across the lotteries, electronic gaming machines, sports betting and interactive gaming markets. Some firms develop and operate gaming establishments and associated lodging, restaurants, horse racing and entertainment amenities. Many companies are involved in developing and selling gaming applications. E-sports or sporting events or tournament services, content management systems, video software, mobile applications and e-sports data platform solutions are provided as well.

Key Themes Shaping the Gaming Industry

Macroeconomic Pressure on Discretionary Spending: Economic uncertainty, persistent inflation and elevated living costs continue to pressure consumer discretionary spending, creating challenges for the gaming industry. Casino visits, sports betting and online gaming are largely entertainment-driven expenditures and can be affected when households face higher costs for essentials. Lower-income consumers may be particularly cautious, potentially limiting revenue growth for regional casino operators that depend heavily on local customers.

Rising Regulatory Pressure and Tax Burden: Regulatory and tax pressures remain key challenges for the U.S. gaming industry. As sports betting and iGaming expand, operators face different licensing requirements, compliance rules and tax structures across states. Higher gaming taxes can reduce profitability, while the lack of uniform regulation increases administrative costs and complicates expansion. Growing scrutiny of responsible gaming and advertising practices could also raise compliance requirements for operators.

Recent Weakness in Macau Gaming Creates a Headwind: Macau gaming trends have weakened in recent months, creating a near-term challenge for casino operators exposed to the market. Gross gaming revenues (“GGR”) fell 12.1% year over year to MOP18.52 billion ($2.3 billion) in June 2026 and declined another 8.4% to MOP20.26 billion ($2.51 billion) in July. Although July revenues increased 9.4% sequentially from June, the back-to-back year-over-year declines point to an uneven recovery. Still, GGR for the first seven months of 2026 remained up 4.4% year over year, providing some support to the broader outlook.

Sports Betting Remains a Key Growth Catalyst: Sports betting continues to provide an important growth opportunity for the gaming industry as legalized wagering expands across the United States. Mobile betting has enabled operators to reach a broader customer base, while strong interest in major sporting events continues to support wagering activity. Leading operators are also investing in technology, product enhancements and personalized experiences to strengthen customer engagement. 

Zacks Industry Rank Indicates Dull Prospects

The Zacks Gaming industry is grouped within the broader Zacks Consumer Discretionary sector. Carrying a Zacks Industry Rank #185 places it in the bottom 25% of more than 247 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential.

We will present a few gaming stocks that you can add to your investment portfolio, given their strong fundamentals. However, it is worth looking at the industry’s shareholder returns and current valuation first.

Industry Underperforms the S&P 500

The Zacks Gaming industry has underperformed the S&P 500 Index and the broader Zacks Consumer Discretionary sector in the past year.

The industry has declined 35.3% over this period against the S&P 500 Index’s growth of 21.3%. In the same time frame, the sector has declined 13.9%.

1-Year Price Performance

Gaming Industry's Valuation

Since gaming companies are debt-laden, valuing the same based on the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) ratio makes sense. The industry currently has a trailing 12-month EV/EBITDA ratio of 14.14 compared with the S&P 500’s 17.91.

Over the past three years, the industry has traded as high as 21.94X and as low as 12.21X, with a median of 17.45X, as the chart below shows.

Enterprise Value-to-EBITDA Ratio (Past 3 Years) 

3 Gaming Stocks to Watch

GameSquare: The company is benefiting from strong growth across its gaming, creator and digital-media businesses. Second-quarter 2026 revenues jumped 137% year over year to $18.5 million, while gross margin expanded to 49% and adjusted EBITDA turned positive at $1 million.

This Zacks Rank #1 (Strong Buy) player’s shares have declined 52.1% in the past year. GAME’s 2026 earnings are likely to witness a decline of 42.9% year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price & Consensus: GAME

Corsair Gaming: The company is supported by sustained demand for gaming hardware, creator-focused peripherals and simulation products. Growth in its Gamer and Creator Peripherals business, continued adoption of Elgato products and Stream Deck, and improving momentum in the Fanatec brand are strengthening its portfolio.

This Zacks Rank #2 (Buy) player’s shares have gained 22.8% in the past year. CRSR’s 2026 earnings are likely to witness growth of 45.2% year over year.

Price & Consensus: CRSR

GDEV: The company is benefiting from disciplined cost management and a sharper focus on user-acquisition efficiency. In the second quarter of 2026, the company reduced selling and marketing expenses by 38% year over year to $33 million, helping net profit rise to $20 million despite a 22% decline in revenues.

This Zacks Rank #2 company’s shares have gained 15.3% in the past year. GDEV’s 2026 earnings are likely to witness growth of 29.8% year over year.

Price & Consensus: GDEV

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This article originally published on Zacks Investment Research (zacks.com).

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