United States President Donald Trump announced tariffs on countries around the world last week. Investors started to panic, leading to some serious consequences for the stock market. Fears of a global trade war and an economic recession took hold.

Over five days, the S&P 500 saw a drop of about 8% and the Nasdaq of about 9%. The FTSE 100 saw a drop of more than 10%. The Hang Seng was the hardest hit and fell by almost 14.5%. Gambling stocks took some heavy losses.

Casino and gambling stocks fell

Casino and gambling stocks weren’t immune to the blows. Some key players had losses in the double digits over a period of five days. Some of the biggest drops happened outside the US, but US gambling stocks also took a heavy hit. Both international and domestic gambling operators were affected.

Wynn Resorts saw a drop of 13.50%. PENN Entertainment fell 13.34%. Las Vegas Sands fell by more than 11%, and MGM Resorts International saw a drop of over 9.50%. Even Asian gambling companies weren’t immune and experienced losses.

Fears of a global recession

Trump’s tariffs are the biggest shift in the global economy since 1980. JP Morgan predicts a 60% chance of a global recession following the announcement. Goldman Sachs predicts a 45% likelihood of a global recession within the following 12 months. Investing in properties is likely to slow down as investors wait for a more stable economy.

Growth in online gambling

Regulus Partners predicts that growing online gambling could help to offset losses in the land-based casino market. Why is this likely to happen?

Rising costs due to tariffs are likely to affect spending on entertainment. With wages stagnating and living costs rising, individuals will have less disposable income. This could potentially shift land-based gambling to online gambling.

It is likely that more states will regulate online gambling as they will want to benefit from the tax revenue. States like Pennsylvania and New Jersey are proof of the benefits that tax revenue from gambling can bring. However, countries such as Venezuela and Argentina are examples of how economic instability can outweigh the advantages of legalizing online gambling.

A positive outcome of economic difficulties is that this is a time when US states tend to legalize online gambling.

Analysts cautiously optimist

Analysts are cautiously optimistic about the gambling sector despite the stock market slump. Many of the tariffs are now on pause for 90 days after pressure from business leaders.

Trump says this is all part of his plan to get other countries to make deals. What stays in place at present is a universal 10% tariff. The 25% tariffs for Canada and Mexico also remain, and a higher 125% tariff targets Chinese imports. China has retaliated with its tariffs.

Online gambling and sports betting are relatively recession-proof

Analysts broadly agree that gambling is relatively recession-proof in comparison to some other industries. The trend during previous recessions is that gambling managed to hold up well. Online gambling, in particular, is a cheap form of entertainment close to home.

Sports bettors are often the least affected by an economic recession. Consumers may reduce spending on high-ticket items like concerts and sporting events, but they don’t stop placing sports bets. The convenience and the fact that they can bet low amounts make it a highly popular form of entertainment in tough times.

No one is sure what Trump will do next, so it is difficult to know the extent of the impact it will have on gambling. Even online gambling operators aren’t immune to broader economic pressures.