In this article, we will take a detailed look at the 19 Best Gambling Stocks to Buy Now. For a quick overview of such stocks, read our article 5 Best Gambling Stocks to Buy Now.
The gambling and casino industry had started showing signs of strong growth near the end of 2023 as customers continue to flock to brick-and-mortar gambling houses and casinos, resulting in huge profits for the industry that suffered badly because of the coronavirus crisis. A Wall Street Journal report in October 2023 said that a whopping 655,000 visitors arrived in Macau, the gambling mecca of the world, in the first five days of China’s long fall holiday. Latest data points show that gambling activity in Macau remained strong as 2024 started. According to data from the Gaming Inspection and Coordination Bureau, gross gaming revenue in Macau jumped 67% year over year to about $2.4 billion in January alone, easily beating estimates of a 63% growth. This figure was at about 78% of the pre-pandemic levels.
Growth Catalysts for Gambling Stocks in 2024
Another catalyst for the casino industry is the strong gambling activity in Macau seen during the recently-concluded Lunar New Year holiday in China. Macau reported about 1.08 million visitor arrivals in the first six days of the week-long holiday that started Feb. 10, up 3.7% from 2019.
One of the latest catalysts for casino and gambling stocks in 2024 was Super Bowl where gambling activity seems to have broken previous records according to new estimates. Some reports say betting handle in Super Bowl 2024 jumped 27% year over year in important states like Nevada, New Jersey and New York.
The Super Bowl 2024 Effect
Flutter Entertainment’s (NYSE:FLUT) online gambling company FanDuel reportedly saw a whopping 43% increase in betting handle to $307 million. Jefferies estimates that about 14 million bets were spread across 2.5 million active users for FanDuel. BetMGM, owned by MGM Resorts International (MGM) and Entain (OTCPK:GMVHF), saw over 30% growth on a year-over-year basis in betting handle during Super Bowl 2024.
Flutter Entertainment’s (NYSE:FLUT) IPO and its Impact in the Gambling Industry
Flutter Entertainment’s (NYSE:FLUT) shares have gained about 22% in 2024 through February 19. The European sports betting and gambling company went public in the US last month, in a move many saw ambitious amid the current volatile economic environment where many IPOs failed to attract investor interest. But the US remains a huge market for Flutter’s FanDuel, with the company website claiming it owns 50%+ market share in the country as of the end of last year. A report from the New York Times quoted Chris Grove, a partner at the consulting firm Eilers & Krejcik Gaming, who said that going public in the US would boost the company’s valuation and liquidity.
Last month Flutter Entertainment (NYSE:FLUT) posted fourth quarter results. The company said FanDuel had 43% gross revenue market share in the fourth quarter. But the company behind notable brands like FanDuel, PokerStars and Paddy Power will have tough competition in the US market where formidable players like DraftKings Inc. (NASDAQ:DKNG) have a huge market share. EPSN also launched ESPN Bet in November 2023. Some reports suggest ESPN Bet has an 8% market share in the US.
Overall, analysts are bullish on the growth prospects of the broader casino and gambling industry. Morgan Stanley analysts Praveen Choudhary and Gareth Leung said in their gambling outlook report for 2024 that the gross gaming revenue (GGR) of local casinos is expected to increase by 28%, driven by a strong performance of Macau’s gaming industry near the end of 2023.
It’s “Game On” for Gaming and Casino Stocks in 2024
Can gambling stocks like DraftKings Inc. (NASDAQ:DKNG), Flutter Entertainment (NYSE:FLUT) and MGM Resorts International (NYSE:MGM) reward investors in 2024? James E. Demmert, Founder and Chief Investment Officer at Main Street Research, while talking to Schwab Network in December 2023, said that it’s “game on” for the gaming and casino stocks since stronger equity markets always bode well for the casino and gaming industry. Demmert said that he’s bullish on the casino sector for 2024 since the economy remains resilient and the sector keeps growing at 10% per year. The analyst said that the major tailwinds for the industry include the huge user base (over 3 billion) using gaming platforms, younger audience and a strong economy. Demmert also talked about DraftKings Inc. (NASDAQ:DKNG) and repeatedly said the company is the leader in the sports betting industry in the US.
DraftKings Inc. (NASDAQ:DKNG) recently talked about its guidance and expectations in 2024 during its Q4’2023 earnings call:
“From an intra-year perspective in 2024, we expect first quarter revenue to increase approximately 45% year-over-year and second through fourth quarter revenue to each grow year-over-year in the 20% to 30% range.
We expect adjusted EBITDA to be approximately breakeven in the first quarter, nearly $150 million in the second quarter, and above $300 million in the fourth quarter. Importantly, we are also now guiding free cash flow. We expect to generate between $310 million and $410 million in free cash flow in 2024 based on approximately $120 million of annual CapEx and capitalized software development costs, as well as a modest source of cash from changes in networking capital and interest income. Therefore, we will end the year with approximately $1.6 billion of cash before using approximately $413 million to fund our proposed acquisition of Jackpocket.”
Read the entire earnings call transcript here.
Methodology
For this article we scanned Insider Monkey’s database of 933 hedge funds and their holdings and picked 19 gambling stocks with the highest number of hedge fund investors as of the end of 2023. The idea was to see which gambling, casino and online sports betting stocks elite money managers were piling into heading into 2024. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
19. GAN Limited Ordinary Shares (NASDAQ:GAN)
Number of Hedge Fund Investors: 7
GAN Limited Ordinary Shares (NASDAQ:GAN) is an interesting penny stock that is gaining a lot of attention especially from retail investors who are interested in the gambling and casino industry. GAN Limited Ordinary Shares (NASDAQ:GAN) offers enterprise software solutions for casino and entertainment industry.
Insider Monkey’s database of hedge funds shows that seven hedge funds had stakes in GAN Limited Ordinary Shares (NASDAQ:GAN) as of the end of the fourth quarter of 2023.
18. Bally’s Corporation (NYSE:BALY)
Number of Hedge Fund Investors: 13
Bally’s Corporation (NYSE:BALY) ranks 18th in our list of the best gambling stocks to buy according to hedge fund investors. The gaming, betting, and interactive entertainment shares were spotted in 13 hedge fund portfolios as of the end of the fourth quarter of 2023.
In November, Bally’s Corporation’s (NYSE:BALY) director Jeffrey Rollins bought of 5,000 shares of Bally’s Corporation (NYSE:BALY) for a transaction value of $50,000.
17.Golden Entertainment, Inc. (NASDAQ:GDEN)
Number of Hedge Fund Investors: 15
Golden Entertainment, Inc. (NASDAQ:GDEN) ranks 17th in our list of the best gambling stocks to invest in 2024 according to hedge funds. Insider Monkey’s database shows that 15 hedge funds had stakes in the taverns and distributed gaming platform company Golden Entertainment, Inc. (NASDAQ:GDEN) as of the end of the last quarter of 2023.
16. Red Rock Resorts Inc (NASDAQ:RRR)
Number of Hedge Fund Investors: 15
Red Rock Resorts Inc (NASDAQ:RRR) was gaining attention from analysts ahead of its earnings report and a majority of Wall Street pundits believed Red Rock Resorts Inc (NASDAQ:RRR) will beat Q4’2023 estimates. And those predictions came true. The company’s GAAP EPS in the fourth quarter came in at $0.95, beating estimates by $0.49. Revenue in the period jumped 8.8% year over year to $462.71 million, surpassing estimates by $21.27 million.
Deutsche Bank analyst Carlo Santarelli and his team believes strengths in the industry helped Red Rock Resorts Inc (NASDAQ:RRR) in the last quarter of 2023. Santarelli reiterated a Buy rating on the stock and also increased his price target to $62 from $54.
Out of the 933 funds tracked by Insider Monkey, 15 hedge funds had stakes in Red Rock Resorts Inc (NASDAQ:RRR).
Diamond Hill Small Cap Fund made the following comment about Red Rock Resorts, Inc. (NASDAQ:RRR) in its Q3 2023 investor letter:
“Our bottom contributors in Q3 included Red Rock Resorts, Inc. (NASDAQ:RRR) and Enovis Corporation. Red Rock Resorts, a casino operator controlling over half the Las Vegas locals market, traded off during the quarter as property margins slipped and Las Vegas revenues overall declined. Shares have also been pressured as investors weigh the likelihood of a near-term recession and as labor union strikes in Las Vegas have broadly pressured the industry. However, we maintain our conviction in Red Rock Resorts and consider its valuation even more compelling at its current level.”
15. Monarch Casino & Resort, Inc. (NASDAQ:MCRI)
Number of Hedge Fund Investors: 15
Casino operator Monarch Casino & Resort, Inc. (NASDAQ:MCRI) ranks 15th in our list of the best gambling stocks to buy according to smart money managers. Insider Monkey’s database of 933 hedge funds shows that 15 hedge funds had stakes in Monarch Casino & Resort, Inc. (NASDAQ:MCRI) as of the end of the fourth quarter of 2023. The most notable hedge fund stakeholder of Monarch Casino & Resort, Inc. (NASDAQ:MCRI) as of the end of September 2023 was Israel Englander’s Millennium Management that had a $16.2 million stake in Monarch Casino & Resort, Inc. (NASDAQ:MCRI).
Monarch Casino & Resort, Inc. (NASDAQ:MCRI) is also among the casino stocks that pay dividends.
Like DraftKings Inc. (NASDAQ:DKNG), Flutter Entertainment (NYSE:FLUT) and MGM Resorts International (NYSE:MGM), MCRI is one of the best gambling stocks for 2024.
14. Churchill Downs Incorporated (NASDAQ:CHDN)
Number of Hedge Fund Investors: 23
Racetracks, casino and online betting company Churchill Downs Incorporated (NASDAQ:CHDN) shares are down by about 8% so far in 2024. In December 2023, Churchill Downs Incorporated (NASDAQ:CHDN) said it would buy back one million shares at $123.75 per share in a private transaction. As of February 20 the stock was trading at $1118.
Of the 933 hedge funds tracked by Insider Monkey, 23 hedge funds were long Churchill Downs Incorporated (NASDAQ:CHDN) as of the end of the fourth quarter of 2023.
The London Company SMID Cap Strategy made the following comment about Churchill Downs Incorporated (NASDAQ:CHDN) in its Q3 2023 investor letter:
“Churchill Downs Incorporated (NASDAQ:CHDN) – CHDN underperformed as 2Q recent results were a bit weaker than expected reflecting softness in the casino business and partially due to a temporary issue in the live racing business. We are not overly concerned about the issues that have pressured the stock, and we continue to have a very favorable view of the long-term outlook for CHDN. In our view, CHDN has a thoughtful and long-term oriented management team running a portfolio of highly cash-generative assets, with a very attractive set of investment opportunities.”
13. Light & Wonder, Inc. (NASDAQ:LNW)
Number of Hedge Fund Investors: 25
Previously known as Scientific Games, Light & Wonder, Inc. (NASDAQ:LNW) is a notable name in the gambling industry as Light & Wonder, Inc. (NASDAQ:LNW) sells gaming machines, lottery terminals, conversion game kits, chips, bingo cards, among other related products.
As of the end of the fourth quarter of 2023, 25 hedge funds had stakes in Light & Wonder, Inc. (NASDAQ:LNW).
12. Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
Number of Hedge Fund Investors: 26
Headquartered in Hong Kong, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) operates resorts and gaming facilities.
As of the end of the fourth quarter of 2023, 26 hedge funds had stakes in Melco Resorts & Entertainment Limited (NASDAQ:MLCO).
11. Everi Holdings Inc (NYSE:EVRI)
Number of Hedge Fund Investors: 31
Everi Holdings Inc (NYSE:EVRI) makes slot machines and financial equipment for casinos.
As of the end of the fourth quarter of 2023, 31 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Everi Holdings Inc (NYSE:EVRI).
10. Genius Sports Limited (NYSE:GENI)
Number of Hedge Fund Investors: 31
Genius Sports Limited (NYSE:GENI) offers tech solutions and services for the sports, sports betting, and sports media industries. The stock has gained about 30% over the past one month. In December, Macquarie started covering the stock with an Outperform rating.
Insider Monkey’s database of 933 hedge funds shows that 31 hedge funds had stakes in Genius Sports Limited (NYSE:GENI). The biggest stake in Genius Sports Limited (NYSE:GENI) is owned by Catherine D. Wood’s ARK Investment Management which owns a $34 million stake in Genius Sports Limited (NYSE:GENI).
9. PENN Entertainment, Inc. (NASDAQ:PENN)
Number of Hedge Fund Investors: 31
PENN Entertainment, Inc. (NASDAQ:PENN) came in the limelight in December 2023 after it was reported that HG Vora Capital, which had a $333 million stake in PENN Entertainment, Inc. (NASDAQ:PENN), was seeking board seats. A Wall Street Journal report said PENN Entertainment, Inc. (NASDAQ:PENN) intends to begin a proxy fight if it fails to get board seats. HG Vora reportedly believes PENN Entertainment, Inc. (NASDAQ:PENN) is deeply undervalued and wants changes in board structure.
As of the end of the fourth quarter of 2023, 31 hedge funds out of the 933 funds in Insider Monkey’s database had stakes in PENN Entertainment, Inc. (NASDAQ:PENN).
Baron Growth Fund made the following comment about PENN Entertainment, Inc. (NASDAQ:PENN) in its Q2 2023 investor letter:
“PENN Entertainment, Inc. (NASDAQ:PENN) operates regional casinos across the U.S. Shares fell on investor concerns that a potential recession would negatively impact visitor spending. While an increase in competition and economic deterioration in certain regional markets is pressuring results, we believe PENN will successfully navigate current headwinds given its strong balance sheet and cash flow profile. We believe PENN will continue generating strong cash flow to invest in its digital gaming opportunity and return cash to shareholders through buybacks. PENN’s stock, which fell to an historical trough EBITDA multiple during the quarter, should revert to its historical average multiple as conditions improve and its digital gaming operation reaches breakeven revenue and cash flow in 2024.”
8. International Game Technology PLC (NYSE:IGT)
Number of Hedge Fund Investors: 33
UK-based International Game Technology PLC (NYSE:IGT) sells slot machines and other casino-related tech equipment. As of the end of the fourth quarter of 2023, 33 hedge funds had stakes in International Game Technology PLC (NYSE:IGT). The stock has a dividend yield of 3% as of February 3.
In addition to DraftKings Inc. (NASDAQ:DKNG), Flutter Entertainment (NYSE:FLUT) and MGM Resorts International (NYSE:MGM), International Game Technology PLC (NYSE:IGT) is one of the best gambling stocks to buy in 2024 according to hedge funds.
7. VICI Properties Inc (NYSE:VICI)
Number of Hedge Fund Investors: 33
With a dividend yield of over 5%, VICI Properties Inc (NYSE:VICI) is a highly attractive stock in the gambling and entertainment space. VICI Properties Inc (NYSE:VICI) is a REIT that specializes in casino and entertainment properties.
Out of the 933 hedge funds tracked by Insider Monkey, 33 hedge funds had stakes in VICI Properties Inc (NYSE:VICI).
Here is what Baron Real Estate Income Fund has to say about VICI Properties Inc. (NYSE:VICI) in its Q2 2023 investor letter:
“We have slightly decreased our already modest exposure to the triple net gaming REIT VICI Properties Inc. (NYSE:VICI), an owner of quality gaming, hospitality, and entertainment properties. The company pays a 6% dividend that is well covered, has a strong track record of making accretive acquisitions, and has additional opportunities for growth in the years ahead.”
6. Boyd Gaming Corporation (NYSE:BYD)
Number of Hedge Fund Investors: 34
Boyd Gaming Corporation (NYSE:BYD) ranks seventh in our list of the best gambling stocks to buy now. As of the end of the fourth quarter of 2023, 34 hedge funds tracked by Insider Monkey had stakes in Boyd Gaming Corporation (NYSE:BYD).
During its Q3 earnings call Boyd Gaming Corporation (NYSE:BYD) talked about its dividends and shareholder returns:
“Additionally, we paid a quarterly dividend of $0.16 per share on October 15. Between share repurchases and dividends, we have returned more than $1 billion to shareholders since resuming our capital return program two years ago. And by year-end, we will have returned over $1 billion through our share repurchase program alone. As of September 30, we have approximately $426 million remaining under our current repurchase authorization. Thanks to our substantial free cash flow, we have balanced our capital return program and our property reinvestments while maintaining a strong balance sheet. Our total leverage at the end of the quarter was 2.3x, while lease adjusted leverage was 2.7x.
We have no near-term maturities and ample borrowing capacity under our credit agreement. Our balance sheet is the strongest in the company’s history. Providing us the confidence in our ability to reinvest in our portfolio and return capital to shareholders while pursuing opportunities to further grow our company.”
Read the full earnings call transcript here.
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Disclosure: None. 19 Best Gambling Stocks to Buy Now is originally published on Insider Monkey.