PENN Entertainment (PENN) Falls Hard on Prediction Market Threats

We recently published 10 Stocks Taking a Nosedive. PENN Entertainment Inc. (NASDAQ:PENN) is one of the worst performers on Wednesday.

PENN Entertainment dropped for a 4th consecutive day on Wednesday, slashing 5.74 percent to close at $16.90 apiece as investors sold off positions in gaming stocks amid threats posed by the surging prediction markets.

PENN Entertainment Inc. (NASDAQ:PENN) dropped alongside its counterparts, including Caesars Entertainment Inc. (NASDAQ:CZR), with the overall sector facing pressure from the prediction markets recording billions worth of contracts.

Just recently, Robinhood Markets and Kalshi announced a jump in their trading volumes in the third quarter alone, with the former booking 2 billion prediction contracts, while Kalshi saw a 90-percent jump in sports betting on its platform. The latter also gained an edge for its capability to operate in jurisdictions and age brackets currently off-limits to most gaming firms. The rapid increase sparked sell-offs in PENN Entertainment Inc. (NASDAQ:PENN), which similarly offers sports betting services.

In an interview with Bloomberg, an analyst from investment firm Citizens said that gaming companies “need to come out with a strategy for investors — whether it’s launching prediction markets or stepping up marketing.”

“Until that happens, the prediction markets present a risk,” the analyst added.

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Disclosure: None. This article is originally published at Insider Monkey.