The battle for betting supremacy is heating up in the US. As one streaming giant makes its move to acquire NFL streaming rights, another is gearing up to be the biggest bookmaker in the country. Football betting is beginning to shape up as a major revenue generator in the country. Just 7 years ago, the sports betting volume in the country stood at $400 million. In 2024, a whopping $14.2 billion was spent on sports betting! People have taken a liking to enhance the thrill and excitement of live sports viewing and many companies are taking full advantage of that.
This rise in the use of bets to enhance the viewing experience is an attractive investment opportunity for investors. The gambling sector consists of many small caps that could skyrocket as the industry strengthens its foothold in the country. At the same time, there is a regulatory hurdle that the country still has to cross before putting money in gambling or casino stocks can be considered ‘investment’ in its purest form.
Amid these risks and opportunities, people are bravely backing some companies to become major players in the industry. Some of these stocks are comfortably outperforming the broader market, a trend that is likely to continue in 2025. We therefore decided to look at the stocks that are dominating the sector so far in 2025.
To come up with our list of the 10 hottest gambling stocks of 2025 so far, we only considered stocks with a market cap of at least $100 million that were outperforming the S&P 500.
10. Light & Wonder Inc. (NASDAQ:LNW)
Light & Wonder Inc. is a gaming company that operates through the iGaming, SciPlay, and Gaming segments. The company also serves the casino and gambling industry through products like video lottery terminals, card shufflers, chip sorters, deck checkers, and other gaming equipment. Its stock is up 12.32% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
One of the things that attracts investors to LNW is its strong management. After the company went into debt to finance M&A deals that didn’t turn out well, it was unable to judge the changing consumer preferences in the gambling industry. That all changed with a new management which not only turned the company’s books around but also focused on key segments like social gaming, gaming equipment, and services. All three of these segments showed double-digit growth in the third quarter. It therefore doesn’t come as a surprise that the stock is rallying just before the Q4 earnings scheduled for 25th February.
9. Accel Entertainment (NYSE:ACEL)
Accel Entertainment is a distributed gaming operator in the US and generates revenue by installing, operating, and maintaining gaming terminals. The company also operates gambling equipment in non-casino areas such as restaurants and grocery stores. Its stock is up 14.42% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
The company is just coming off an acquisition spree after spending $40 million to acquire LSM Gaming and Toucan Gaming, two firms that own video poker establishments. The stock has shown considerable volatility since these acquisitions late last year. However, shrewd investors are taking each dip as a buying opportunity considering how undervalued the stock is. It trades at a PE ratio of 14.27, which is less than half the average PE of its industry. The price-to-book ratio of 4.71 is also attractive, again less than half of the industry average PB value of 9.89! As the company starts reaping the rewards of its latest acquisitions, the valuation could unravel unlocking shareholder returns.
Hedge Fund Resource Center