More gambling companies underwent layoffs this week, with cuts at Penn Entertainment and Gambling.com Group, underscoring a troubling trend as the industry adopts artificial intelligence while facing financial pressure and increasing competition from prediction markets.

Penn Entertainment cut loose more than 75 employees this week across its Penn Interactive business unit, multiple sources familiar with the matter tell Front Office Sports. That division houses theScore Bet—previously known as ESPN Bet before Penn and ESPN ended their planned 10-year partnership after a little over two years—as well as Penn’s online casino and social gaming businesses.

As of December, Penn had more than 23,400 total employees globally, according to a U.S. Securities and Exchange Commission filing. It’s not clear exactly how many employees sit within Penn Interactive. A source familiar with the matter tells FOS it was more than 500 before this week’s layoffs. This round follows Penn layoffs that took place in November and over the summer. 

The company last month reported $1.4 billion in revenue for the first quarter of 2026. CEO Jay Snowden said the company was “pleased to report another solid quarter” and noted there were “encouraging” signs across the company’s portfolio. As of Friday afternoon, Penn shares were up 2.5%, and are up 10% year to date. The company has not issued any statement about the layoffs, and a representative for Penn did not respond to a request for comment. 

Gambling.com Group, which goes by GDC Group and incorporated in the Channel Island of Jersey, describes itself as a “marketing and sports data services company for the global online gambling industry.” It announced a 25% reduction in its workforce Thursday. Pitchbook says GDC has just under 600 employees, meaning the layoffs could impact roughly 150 people.

GDC owns brands including Bookies.com, RotoWire, and Casinos.com. The layoffs were announced the same day the company reported first-quarter earnings. GDC posted $40.4 million in revenue, which was down slightly from the same period last year, when the company reported roughly $40.6 million in revenue. Cofounder and incoming CEO Kevin McCrystle said the numbers were “in line with our expectations.”

During the company’s earnings call, the layoffs were discussed in detail. “We’ve been focused on AI adoption for the past 18 months,” McCrystle said. GDC is using AI across all aspects of the business, including marketing, sales, and coding; 80% of new code is being generated by AI, McCrystle said. GDC is “resetting our team structures, roles, and processes to fit an AI-first world,” and the company expects annual savings of about $13 million.

McCrystle said the cuts included people across all aspects of the organization. “It’s not like we cut our development team by half. There was some there as well, but it was really across the entire business.” A representative for GDC did not respond to a request for additional comment.

GDC shares, which have been steadily falling for most of the last year, plummeted further after the announcement. As of early Friday afternoon, shares were down more than 41%.

The third company in the gambling industry to undergo layoffs this week was Israeli sports data provider LSports, which lists sports betting giants like Entain and DraftKings as partners on its website. John Costello, a content marketing manager at the company, posted on LinkedIn that he was one of 39 people “who have been made redundant.” According to LinkedIn, there are nearly 240 total employees at LSports. A representative for the company did not respond to a request for comment.

A Larger Trend?

The cuts follow layoffs earlier this year at Underdog, PrizePicks, and DraftKings. FanDuel, meanwhile, just pushed out its CEO amid disappointing financial performance. Shares of FanDuel’s parent, Flutter Entertainment, are down 56% year to date.

Analysts say the layoffs reflect a broader shift hitting the online gambling industry as growth slows, investors demand profitability, and companies race to adapt to both AI and new competitive threats like prediction markets.

Jordan Bender, equity research analyst at Citizens, tells FOS the industry has reached a point where “growth is starting to materially slow.” There are multiple reasons for that, he says, including a natural slowing of growth now that it’s been eight years since the U.S. Supreme Court decision that struck down the federal ban on sports betting, as well as the threat of prediction markets.

“These companies were built and scaled for an environment where revenue was expanding, yet slowing growth is leaving fat on the cost structures of these businesses,” Bender says.

Barry Jonas, senior gaming analyst at Truist Securities, says gambling stocks have come under pressure, forcing companies to improve earnings outlooks and cut costs proactively. At the same time, firms are eager to embrace AI tools to improve efficiency and avoid appearing technologically behind competitors.

“There is a real risk here that companies need to get ahead of,” Jonas says. “That means not fighting AI, but using it.”

Jonas says the same logic applies to prediction markets, which many gambling executives increasingly view as another disruptive force reshaping the industry. He points to the fact that DraftKings and FanDuel each launched their own prediction-market platforms. “They could have sat out, but they are looking to where the puck is going and making sure to head in that direction.”

“If we talk about disruptive threats, you can almost take everything I said about AI but replace that word with ‘prediction markets,’” Jonas tells FOS.