Investing can be a gamble, as gaming shorts are finding out this week.
Short sellers of the 22 stocks in the U.S. casinos and gaming sector are down more than $200 million in mark-to-market losses after the U.S. Supreme Court ruled that a 1992 federal law prohibiting sports gambling in most states is unconstitutional, paving the way for individual states to decide whether they want to allow regulated sportsbooks to be opened.
Gaming stocks like MGM Resorts (MGM - Get Report) and Caesars Entertainment (CZR - Get Report) have jumped in recent sessions on the news, leading to the losses endured by investors betting against the stock price of gaming.
Short interest in the gaming sector was at $4.65 billion in 2018, according to S3 Analytics, a 16%, or $640 million, increase over the previous year.
Caesars' shorts are down $70 million now that the company announced it will provide nationwide sports betting options in the states that will allow such betting.
Scientific Games shorts are down $53 million in mark to market losses over the last three sessions as the company also looks to provide sports betting infrastructure.
"We can expect to see continued movement of short exposure between the 'winners' and 'losers' of the SCOTUS decision with short covering adding to long buying in stocks such as CZR, Churchill Downs Inc. (CHDN - Get Report) , International Game Technology (IGT - Get Report) and SGMS and short selling adding to long selling in stocks such as MGM, Eldorado Resorts (ERI - Get Report) and WYNN," S3 said in its report.