You will find fewer things that annoy people in the financial world more than laymen that equate investing and gambling. Sure, both activities involve risk and choice. Specifically, the risk of capital with dreams of future profit. However, gambling is predicated on short-term luck, while equities investing can last you a lifetime. Especially if you can recognize value where others cannot.
However, what if we combine the two, and look into investing in gambling stocks? It’s a surging industry. Estimates say that the global gambling market will hit a value of around $565 billion, growing at a rate of 5.9% per year through 2022.
Tiger Legatus Master Fund was up 0.1% net for the second quarter, compared to the MSCI World Index's 7.9% return and the S&P 500's 8.5% gain. For the first half of the year, Tiger Legatus is up 9%, while the MSCI World Index has gained 13.3%, and the S&P has returned 15.3%. Q2 2021 hedge Read More
In 2018, a new era began for sports betting in the US, as the Supreme Court lifted the federal ban on the activity, promoting 11 states to legalize the practice.
While this was a significant occurrence in North America, the legalization of sports betting has been happening around the world for quite some time. Countries have become far laxer in terms of regulating gambling, and the industry is booming. Online gambling is growing at an exponential rate due to the emergence of new technologies.
A transition is occurring from offline to online. It seems like this is a terrific time to think about investing in online gambling stocks, as currently, online gambling has an 11% market share globally, increasing 1% or 2% per year in regards to penetration.
The gambling market segments into lotteries, casinos, sports betting, and others. Surprisingly, the lotteries segment was the largest in 2018, at 46% of the total share. Sports betting is the fastest-growing segment, while casinos are holding firm. E-sports betting is another thriving and relatively new area worth exploring. Online casinos and poker websites saw a surge during the Covid pandemic of 2020 due to total lack of sports betting opportunities and brick and mortar casino shut downs. Watchdog sites like Legitimatecasinos.com saw an increase in user registrations to their approved live dealer casinos, these are live broadcasts of casino dealers that simulate a real life casino environment for online players.
888 Holdings PLC, also known as 888.com, is a company based out of Gibraltar that owns several popular gambling brands and websites. It has brands in many gambling spheres, including online casinos, poker sites, sports betting brands, and bingo brands. In 2013, it became the first licensed online casino in the US. You can find the company on the London Stock Exchange and is a constituent of the FTSE 250 Index.
It’s an affordable stock despite having a ton of upside thanks to its growing presence in the United States.
Previously known as the Promus Companies and Harrah's Entertainment, this industry juggernaut, founded in 1937 in Reno, today is based in Paradise, Nevada. In 2020, Eldorado Resorts acquired it, leading to the name change. It operates more than fifty properties and seven golf courses. Seven years ago, it was the fourth-largest gaming company in the world with revenues of $8.6 billion per year.
The company’s stock has remained stable after a dip at the start of the year. The comeback is proof of brand stability and growth potential. Caesars is currently working with ESPN, providing betting lines for many of their shows.
DraftKings is an American fantasy sports contest and sports betting service provider. In 2018, the company launched the first legal mobile sports betting operator in New Jersey, DraftKings Sportsbook. It recently became publicly listed, following a merger with Diamond Eagle Acquisition and SBTech. On its first day of trading, the stock price surged as high as 18% at $19.35.
The company saw amazing 50-fold growth in fantasy esports contests this year, allowing users to bet on simulated matches in video games.
You may not recognize the name, but that doesn’t mean that this isn’t a giant company that’s been around close to 50 years and has over 24,000 employees. This Nevada-based company is one of the largest operators in the “Las Vegas Locals” market, operating nine properties that cater primarily to residents.
Lately, the company hasn’t posted impressive numbers, recording net losses of around $18 million and disappointing quarterly revenues. That said, many value investors think that the stock’s decline is an overreaction.
Formerly known as Global Cash Access Holdings, Everi is a company based in Spring Valley, Nevada that makes slot machines and provides equipment and services to casinos. Those familiar with the casino industry, know that slots are the cash-cows of both land-based and digital establishments, accounting for 80% of all revenues.
The company’s stock has doubled year over year, showing strong revenue growth. As casino operators continue to expand in the US and other markets, it is wise to keep a lookout for Everi and other developers’ stock prices. They are in a position to benefit from the global expanding player base.
LeoVegas AB’s stocks trade on the Stockholm Stock Exchange. The Swedish mobile gaming company and provider of online casino and sports betting services, has seen a share price rise of over 20% in recent months. The company founded in 2011 by Gustaf Hagman and Robin Ramm-Ericson has experienced rapid growth due to the increase of smartphone use and their “Mobile first” motto.
LeoVegas is in a decent position for further growth among other similar brands such as Bet UK and Royal Panda.
Listed on the London Stock Exchange, Flutter Entertainment, or previously known as Paddy Power Betfair, is a bookmaking company created by the merger of Paddy Power and Betfair, and the acquisition of The Stars Group. It also has a 58% ownership stake in New York bookmaker and fantasy sports company FanDuel, which alongside DraftKings controls 83% of the online sports betting market in the US.
Flutter operates twelve top gaming brands and has an operating income of £280.6 million. It is on an upward trajectory, continuously expanding.
Churchill Downs Inc.
Another company that may not be a household name, but Churchill Downs Inc. owns twelve US racetracks and casino properties. The company evolved from owning a single track in Louisville, Kentucky, to a multi US-state, publicly-traded company with over 4,500 employees.
It also owns the TwinSpires horse racing brand and the BetAmerica sports betting brand. Churchill Downs stock was a big winner from the sports gambling legalization in the US, gaining 69% due to its sports focus. These past few years, the company has been aggressive in growing via acquisitions. It’s safe to say that we can anticipate further expansion deals in the future.
Esports Entertainment Group (GMBL)
The company provides esports enthusiasts an advanced betting system that gives them the chance to bet on simulated computer matches. Also, GMBL intends to offer online multiplayer mobile, console, and PC video game tournaments for cash prizes.
US esports fans, currently, cannot bet on the GMBL platform due to legal restrictions. However, there’s potential for law changes. What you have to ask yourself is if you believe that Generation Z and young millennials will favor esports gambling as opposed to regular sports gambling.
Penn National Gaming
Penn National Gaming is an American operator of casinos and racetracks, based in Wyomissing. It operates or has ownership interests in 41 gaming and racing properties in 19 states and video gaming terminal operations with slot machines as their center of attention.
Penn National made headlines earlier in the year when it announced a $163 million, 36% ownership stake in Barstool Sports, a sports and pop culture blog founded by David Portnoy in 2003. Barstool creates opportunities for Penn to increase its sports betting presence and acquire new customers.