In this article, we discuss the 10 largest gambling stocks of 2021.
Covid-19 took a toll on the gambling industry, due to the closure of casinos globally. American Gaming Association reported that the U.S. casino revenues plunged 31.3% in 2020, reaching their lowest since 2003. However, with the rise of online betting sites, the gambling and casino industry managed to get back on its feet after stumbling for a while. According to a report published by Research and Markets, the global gambling market is expected to grow at a CAGR of 7%, reaching $674.7 billion in 2025, from $516 billion in 2021.
The rise in online gambling has further stabilized the industry, which now offers lucrative investment opportunities. As sports betting is becoming legal in various states, the industry is catching investors’ eyes, as it saw over $5.95 billion worth of investments in Q3 of 2020, as reported by Forbes. It is estimated that online sports betting will be available to over 96% of the U.S. population by 2025. The sports betting industry alone is expected to generate revenues of $175.8 billion and is projected to reach $200 billion by 2023.
S&P 500 Casinos & Gaming Index gained 35.33% in the past year, compared with 34.2% returns of S&P 500 during the same time. With the rollout of vaccines, investors are expecting a rebound in gambling stocks. According to Jim Cramer, the vaccination process has made it easier for people to resume travel, which would enhance the casino and gambling activity in the U.S. Nevada casinos recorded $1.23 billion in winnings in May, reporting the highest single-month win in the state’s history.
Some of the notable gambling stocks include Caesars Entertainment, Inc. (NASDAQ:CZR), MGM Resorts International (NYSE:MGM), Las Vegas Sands Corp. (NYSE:LVS), Penn National Gaming, Inc. (NASDAQ:PENN), and Wynn Resorts, Limited (NASDAQ:WYNN).
Our Methodology:
Let’s analyze our list of the largest gambling stocks of 2021. The companies mentioned below specialize in online gaming, sports betting, and live casinos.
These are some of the most popular gambling and casino stocks among the 873 hedge funds tracked by Insider Monkey.
Copyright: sainaniritu / 123RF Stock Photo
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The 10 Largest Gambling Stocks of 2021
10. Red Rock Resorts, Inc. (NASDAQ:RRR)
Number of Hedge Fund Holders: 26
Red Rock Resorts, Inc. (NASDAQ:RRR) is a leading gaming company, operating over 21 casinos and properties in the U.S. Recently, B. Riley appreciated the company’s launch of an online social casino, which will attract more customers. The firm lifted its price target on Red Rock Resorts, Inc. to $26, with a Buy rating on the shares.
At the end of Q2, 26 hedge funds tracked by Insider Monkey reported having stakes in Red Rock Resorts, Inc., compared with 28 in the previous quarter. The total value of these stakes is $658.2 million. Eminence Capital is the biggest shareholder of Red Rock Resorts, Inc. in Q2, owning roughly 5 million shares.
Since the beginning of the year, Red Rock Resorts, Inc. delivered a 108.1% return to shareholders, while the stock gained 191.1% in the past year.
Like Caesars Entertainment, Inc., MGM Resorts International, Las Vegas Sands Corp., Penn National Gaming, Inc., and Wynn Resorts, Limited, Red Rock Resorts, Inc. is one of the notable stocks to buy in 2021.
Diamond Hill Capital mentioned Red Rock Resorts, Inc. in its Q2 2021 investor letter. Here is what the firm has to say:
“On an individual holdings’ basis, top contributors to return included Red Rock Resorts, a casino operator controlling over half the Las Vegas locals market. Red Rock is benefiting from pent-up demand, but it also executed well through the pandemic— controlling costs by selectively reopening facilities, improving its balance sheet and delivering record margins.”
9. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 26
DraftKings Inc. (NASDAQ:DKNG) suffered a lot in the face of the pandemic, reaching $12.49 per share in March 2020. However, the stock has rebounded, gaining 25.97% in the past year. DraftKings Inc. is an American sports betting operator.
In October, Citigroup initiated its coverage on DraftKings Inc. with a Buy rating and a $66 price target. The firm’s analyst expects the company to offer long-term growth to investors because of the growing iGaming market. In Q2, DraftKings Inc. reported revenue of $298 million, up 320% from the prior-year quarter.
At the end of Q2, 26 hedge funds tracked by Insider Monkey reported having stakes in DraftKings Inc..
Carillon Tower Advisers mentioned DraftKings Inc. in its Q2 2021 investor letter. Here is what the firm has to say:
“DraftKings is a digital sports entertainment and gaming company that provides online and retail sports wagering, online daily fantasy contests, and online casino games. The firm’s quarterly results were highlighted by much better than expected revenues, although profitability metrics did not top expectations by the same magnitude. The stock has been under pressure with investors digesting continued financial losses as DraftKings invests in new jurisdictions. In addition, late in the quarter the company was the subject of a short report alleging questionable activities involved with an acquisition. We sold the stock.”
8. Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
Number of Hedge Fund Holders: 29
Melco Resorts & Entertainment Limited operates resorts with casino gaming facilities in Asia and Europe. The company reported a 222% growth in its revenue in Q2 2021, at $566.7 million.
At the end of Q2, 29 hedge funds in Insider Monkey’s database were bullish on Melco Resorts & Entertainment Limited, the same as in the previous quarter. The total value of these stakes is $755 million, compared with $728.3 million in Q1.
This September, Citigroup set a $14.5 price target on Melco Resorts & Entertainment Limited, with a Buy rating on the shares, highlighting a 32% growth in Macau gaming revenue in September.
7. Churchill Downs Incorporated (NASDAQ:CHDN)
Number of Hedge Fund Holders: 35
In Q2 2021, Churchill Downs Incorporated (NASDAQ:CHDN) presented a positive hedge fund sentiment, as 35 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 19 in the previous quarter. These stakes are valued at $694.2 million. With over 16 industry-leading casinos, Churchill Downs Incorporated remains one of the largest gambling stocks of 2021.
Recently, Berenberg initiated its coverage on Churchill Downs Incorporated with a Buy rating and a $294 price target. The firm’s analyst showed confidence in the company’s digital segment as the gaming sector recovers. In Q2, Churchill Downs Incorporated posted an EPS of $3.08, beating the estimates by $0.44. The company’s revenue also presented a 178.3% year-over-year growth at $515 million.
6. Boyd Gaming Corporation (NYSE:BYD)
Number of Hedge Fund Holders: 36
Boyd Gaming Corporation (NYSE:BYD) announced its Q3 results on October 26, with an EPS of $1.30 beating the estimates by $0.04. Boyd Gaming Corporation reported revenue of $846 million, up from $652.2 million during the same period last year.
Boyd Gaming Corporation is an American gaming and hospitality company. The number of hedge funds tracked by Insider Monkey having stakes in Boyd Gaming Corporation grew to 36 in Q2 2021, from 22 in the previous quarter. The total value of these stakes is $534.8 million, up significantly from $299 million in Q2.
Recently, Morgan Stanley lifted its price target on Boyd Gaming Corporation to $90, while maintaining an Overweight rating on the shares. The firm’s analyst highlighted the company’s strong Q3 result.
5. Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 37
Wynn Resorts, Limited is an American operator of high-end hotels and casinos. The company launched its online casino and sports betting app, WynnBET, which is available in six states in the U.S. Founded in 2002, Wynn Resorts, Limited remains one of the largest gambling stocks of 2021.
Wynn Resorts, Limited reported solid Q2 results, posting an EPS of -$1.12, beating the estimates by $0.46. The company’s revenue for the quarter grew significantly to $990.1 million, from $85.7 million during the same period last year. Recently, Morgan Stanley set a $107 price target on Wynn Resorts, Limited, with an Overweight rating on the shares.
At the end of Q2, 37 hedge funds tracked by Insider Monkey reported owning stakes in Wynn Resorts, Limited, compared with 49 in the previous quarter. The total value of these stakes is $712.4 million.
4. Penn National Gaming, Inc. (NASDAQ:PENN)
Number of Hedge Fund Holders: 40
Recently, Morgan Stanley initiated its coverage on Penn National Gaming, Inc. with an Equal Weight rating and an $85 price target, highlighting the company’s iGaming and sports betting segment. Penn National Gaming, Inc., an American casino company, operates over 44 casino facilities in the U.S., which makes it one of the largest gambling stocks of 2021.
At the end of Q2, 40 hedge funds in the Insider Monkey database reported owning stakes in Penn National Gaming, Inc., compared with 42 in the previous quarter. These stakes are valued at over $1.03 billion.
Carillon Tower Advisers mentioned Penn National Gaming, Inc. in its Q2 2021 investor letter. Here is what the firm has to say:
“Penn National Gaming is a diversified omnichannel provider of retail and online gaming, live racing, and sports betting entertainment. After a substantial run, Penn National Gaming sold off during the quarter, reflecting a profit taking in a number of sports and online gambling stocks. However, fundamentals are healthy in firm’s regional gaming markets and its sports betting initiatives remain strong.”
3. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders: 48
Las Vegas Sands Corp. stands third on our list of the largest gambling stocks of 2021. On October 20, the company reported its Q3 results, with a 92.2% year-over-year growth in its revenue at $857 million. Casino revenues accounted for $533 million of the gross revenue, up from $281 million in the prior-year quarter.
Las Vegas Sands Corp. is an American casino and resort company. Recently, Stifel lifted its price target on Las Vegas Sands Corp. to $51, with a Buy rating on the shares, highlighting the company’s prospective investment in Macau gaming.
As of Q2 2021, 48 hedge funds tracked by Insider Monkey were bullish on Las Vegas Sands Corp., compared with 62 in the previous quarter. The total worth of these stakes is over $1.75 billion. D E Shaw was the company’s largest shareholder in Q2, owning roughly 6 million shares.
Baron Funds mentioned Las Vegas Sands Corp. in its Q2 2021 investor letter. Here is what the firm has to say:
“The shares of Las Vegas Sands Corporation, a leading developer of luxury casino resorts in Macau and Singapore, declined in the most recent quarter in large part due to COVID-19 travel-related restrictions. We believe the shares are attractively valued and will recover sharply when travel restrictions are lifted.”
2. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders: 59
In Q2 2021, MGM Resorts International presented a positive hedge fund sentiment as 59 hedge funds tracked in the Insider Monkey database reported owning stakes in the company, up from 57 in the previous quarter. The total value of these stakes is over $2.8 billion.
MGM Resorts International is an American hospitality company that also specializes in casinos and resorts. Recently, Credit Suisse upgraded MGM Resorts International to Outperform, while lifting its price target to $68. The firm’s analyst expects the company to report strong Q3 results.
MGM Resorts International also operates its sports betting app, BetMGM, which targets over $1 billion in net revenue in 2022, owning to the growing sports betting industry.
Oakmark Funds mentioned MGM Resorts International in its Q2 2021 investor letter. Here is what the firm has to say:
“We originally established our position in MGM during 2016. At that time, we believed its valuation did not reflect the improving fundamentals of the Las Vegas Strip, which was recovering from years of overbuilding. The market had also failed to recognize the quality of MGM’s assets and its potential to dramatically reduce a bloated cost structure. A long history of private market transaction activity further supported our view that the stock was materially undervalued. However, choppy execution by former management and a profit growth plan that failed to live up to expectations made this a bumpy (yet rewarding!) investment for Oakmark. Perhaps the biggest surprise relative to our initial thesis is the momentum and excitement surrounding the online sports gambling market. The company’s BetMGM platform has quickly staked the third-largest market position in online sports betting with plans to capture up to 25% of this $30+ billion market, which continues to grow rapidly. The exuberance surrounding digital gaming, coupled with expectations for a strong post-pandemic recovery in Las Vegas, has lifted the stock price to our estimate of intrinsic value. Therefore, we sold our shares in favor of more attractively priced alternatives.”
1. Caesars Entertainment, Inc. (NASDAQ:CZR)
Number of Hedge Fund Holders: 73
Caesars Entertainment, Inc. tops our list of the largest gambling stocks of 2021. It is one of the largest casino companies in the world, with over 50 properties and several golf courses.
On October 25, Wells Fargo added Caesars Entertainment, Inc. to its list of the Signature Picks, noting the company’s potential to become the leader in the iGaming sector. In Q2, Caesars Entertainment, Inc. reported revenue of $2.5 billion, up significantly 1,876% from the prior-year quarter. The stock gained 132.6% in the past year.
At the end of June, 73 hedge funds tracked by Insider Monkey reported owning stakes in Caesars Entertainment, Inc., compared with 76 in the previous quarter. The total value of these stakes is over $1.83 billion.
You can also take a look at 15 Best Casino Stocks to Invest In and 10 Best Sports Betting Stocks to Buy Now
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This article is originally published at Insider Monkey.
