Anyone who has gambled at a casino, whether a land casino or an online platform, is aware that the odds usually favor the house. After all, gaming firms wouldn’t last long if they didn’t maintain a competitive advantage. Moreover, the casino is not just about lucky numbers, and it requires skills and tactics.
One strategy to take advantage of the house’s advantage is to discover games in which you can bet with the house, placing your bets on the establishment. However, a better way to wager on the house is by purchasing the gaming company’s stock at the world’s largest casino: the stock market.
Though casino and gambling expenditure fell slightly during the previous recession, the percentage of gamblers and dollars spent on gaming is currently on the rise again, indicating that economic growth is more robust than many thought.
According to Statista.com, while the housing market lost 33% of its value and the stock market lost 55% between 2008 and 2009, global casino gaming revenues fell only 2.2%, from $109.73 billion to $107.31 billion. Global casino revenues are expected to exceed $182 billion by 2015, suggesting an annual growth rate of more than 11%.
Total revenues from all gambling venues, including lotteries, fell only 1.8%, from $382 billion in 2008 to $375 billion in 2009. However, it recovered $398 billion by the following year, with estimates of achieving over $485 billion by 2015, for annual growth of more than 18% per year.
Statistics on the Gambling Market
Since the economy began to rebound in March 2009, significant gaming companies in the United States and around the globe have outperformed the broader market several times over. Whereas the S&P 500 index has risen 155% ever since you might have laughed your way to the bank if you had bet on gaming firms like:
- MGM Resorts International (NYSE: MGM) has increased 720%, more than 4 times the S&P 500.
- Wynn Resorts Ltd. (NASDAQ: WYNN) has risen by 970%, more than 6 times the S&P 500.
- SJM Holdings Ltd. (HKG: 0880) has increased 1,100%, outperforming the S&P 500 by more than 7 times.
- Las Vegas Sands Corp. (NYSE: LVS) has increased 3,600%, outperforming the S&P 500 by more than 23 times.
- Galaxy Entertainment (HKG: 0027) has increased 5,200%, exceeding the S&P 500 more than 33 times.
The increased profit potential has sparked a rush in the gaming sector as companies compete to acquire as much possible market share. The recent acquisition of Bally Technologies (NYSE: BYI) by Scientific Games (NASDAQ: SGMS) may be a trail to follow.
Betting on Betting
While you might have missed that chance, here is a list of the best casino and gambling stocks to invest in 2022:
Flutter Entertainment (LSE: FLTR) is an international sports betting and gaming company operating in Ireland, the United Kingdom, Australia, and the United States. FanDuel, the country’s most prominent online sports betting platform, is one of its U.S. assets. Flutter predicted that FanDuel’s share of online wagering on sports would be over 40% by the end of 2021.
FanDuel’s online sportsbook and casino are available in 14 states, while its online casino is authorized in five. The company received a significant push at the outset of 2022 when online gambling on sports became legal in New York, a considerable market. Flutter was one of nine startups awarded a state operating license.
Flutter is the market leader in the more developed U.K. and Ireland markets outside the United States. This is Europe’s largest market. As more gambling markets moved online, Flutter began to gain a larger share. In Australia, it provides SportsBet, which Flutter claims has a 50% share of the online sports betting market and is growing.
MGM Resorts (NYSE: MGM) is a prominent casino business in the United States and Macau. It also controls BetMGM with the British company Entain. BetMGM claims a 20% to 25% stake in the U.S. online sports gambling and betting market. However, this may substantially favor the gaming industry. By the end of 2021, it had a 30% market share in the regions where it operates its online casino.
GM’s physical operations are beginning to recover in 2020. With a new NFL team attracting additional visitors to the city, Las Vegas traffic is starting to return, and the corporation should soon exceed its previous levels. MGM will support its growth by developing two more hotels in 2022 and 2023. Its Macau business should also rebound, and it may penetrate the Japanese market subsequently in the decade.
DraftKings (NASDAQ: DKNG) is the second-largest online bookmaker in the United States, accounting for approximately 25% of the industry, per internal estimates. It presently operates in 17 states, and its online gambling is accessible in 5.
Draftkings is just an online business in the United States. It has no land-based casinos or international activities, making it a pure play on the expansion of online sports gambling in the United States. While this provides the company with significant development potential, given the predicted increase in online sports betting in the United States, it also means the company is currently investing considerably in growth.
According to management, the payback period for expanding into new markets is less than three years, based on launches in states like New Jersey and Illinois. In addition, as its national marketing initiatives meet pent-up demand, it has experienced increased signups in new states. As a result, as more jurisdictions permit online sports betting and gaming, DraftKings’ growth rates may continue to be strong.
Penn (NASDAQ: PENN) controls 44 casinos in 20 states and entered the field of online sports betting in 2020 with the acquisition of a 36% investment in BarStool and theScore. It has online sportsbook licenses in 13 states and online casino licenses in 5. Two dozen of its land-based casinos have retail sportsbooks.
Penn has taken a less aggressive approach to marketing its online gambling, opting for more focused advertisements instead of brand-wide efforts. It has also benefited from the media segments of BarStool and theScore for additional organic marketing of its sportsbook. Consequently, the company has been more successful than online sportsbooks, which engage extensively in marketing.
With operations limited to the United States and Canada, Penn is more of a bet on the future growth of online gambling in North America.
Caesars (NASDAQ: CZR) is renowned for its Caesars Palace casino in Las Vegas. Still, after its procurement by Eldorado, it manages over 50 casinos across the United States. The business then bought William Hill, propelling it into the online bookmaker sector in the United States. It changed the name of William Hill’s company to Caesars Sportsbook.
The company has aggressively promoted its online sportsbook through national advertisements, resulting in a double-digit market share. However, it is causing considerable losses for the company, pushing management to settle on a more strategic and targeted strategy for its advertising campaigns in the future as additional states legalize sports gambling.
Caesars will almost certainly continue to concentrate on acquiring physical casinos to add to its expanding portfolio. Meanwhile, it is constructing two new casinos in Las Vegas. Its ventures in Macao and Singapore also have potential despite significant setbacks.
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