When earnings season rolls around, it's all about expectations. When a company beats expectations, the stock goes up; if it misses expectations, the stock goes down. Or that's usually how it works. 

Today, Penn National (NASDAQ:PENN) has jumped as much as 7% after reporting a pretty disappointing earnings report.

The numbers
Penn's revenue rose 9.9% in the fourth quarter to $743.8 million, but it widely missed its own guidance of $782.4 million and the Street's estimate of $756.1 million. EBITDA fell slightly to $152.3 million and was well below the $182.4 million estimate the company gave. On the bottom line, earnings per share fell more than 50% to $0.19, which missed both company estimates ($0.33) and Wall Street estimates ($0.48). Nevertheless, the stock is up.

In Penn's earnings release you could clearly hear the negative sentiment of the consumer from management. The economy may slowly be getting better and spending overall may be up, but the big change in the fourth quarter was falling consumer confidence, and that's no time to gamble. People were also worried about the fiscal cliff and the pending tax hikes that hit all of us on the first of the year. All of that leaves less disposable income for regional gaming markets like Penn National. 

Impact on gaming
This isn't a good sign for regional gaming, and there are two companies I would be especially worried about. Caesars Entertainment (NASDAQ:CZR) may be known for the resorts it owns on the Las Vegas Strip, but the company makes most of its revenue outside of Las Vegas. If regional markets are struggling and Las Vegas isn't recovering quickly, then a $20 billion debt load will be hard to pay for. 

The other company to watch is Pinnacle Entertainment (NYSE: PNK). The company recently agreed to buy Ameristar Casinos, doubling down its bet on the regional market. I wouldn't expect great results short-term, and there's additional competition in a lot of markets long-term, which makes the regional gaming space a tough bet. 

Foolish bottom line
Penn National may be up today, but I didn't see this as a bullish earnings report. I think this is the best run out of the regional operators, but I'm bearish enough on the space to make an underperform call today on both Pinnacle and Caesars. I just don't see upside for them at the current time.