Investing in gambling stocks has become increasingly popular as the industry expands across casinos, online platforms, and sports betting. Driven by changes in regulation, consumer behavior, and technology, this sector now offers multiple opportunities for investors looking to gain exposure to gaming companies worldwide.
Growing Momentum in Online Platforms and Real Money Casino Apps
The legalization of online gambling has significantly changed the landscape. A study from the Analysis Group found that in states where online gambling is legal, total revenue from land-based casinos and online gaming surpassed pre-online gambling levels by 46%. Platforms now offer users access to real money casino apps, enabling instant play on a wide variety of games directly from mobile devices. This convenience continues to attract new players and drive growth.
Key Companies Shaping the Industry
Several public companies are leading the charge. Las Vegas Sands (LVS), MGM Resorts International (MGM), and DraftKings (DKNG) are some of the better-known names that have expanded into both physical and online operations. Las Vegas Sands anticipates long-term gains from premium markets and international expansion, particularly in places like Macau and Singapore, which are seeing tourist numbers approach pre-pandemic levels.
DraftKings remains a dominant player among sports gambling stocks, while Flutter Entertainment (FLUT), owner of FanDuel, holds substantial market share in online sports betting stocks. Flutter also recently went public in the U.S., further solidifying its position.
The ETF Route: Spreading Risk Across Gambling Stocks
For investors seeking diversified exposure, exchange-traded funds offer a practical solution. Three notable ETFs have emerged in the gambling sector:
- Pacer Bluestar Digital Entertainment ETF (ODDS): A newer fund, ODDS focuses on companies generating revenue from online gambling, video gaming, and esports.
- Roundhill Sports Betting & iGaming ETF (BETZ): BETZ targets pure-play exposure to online gaming and sports betting companies.
- VanEck Gaming ETF (BJK): BJK offers broader exposure, including casinos, gaming equipment, and real estate investment trusts (REITs).
These ETFs allow investors to gain exposure to multiple facets of the gambling industry, from online gaming stocks to traditional casino operators, while reducing individual company risk.
Revenue Growth and Market Performance
The gambling sector continues to show solid revenue growth. According to the American Gaming Association, combined revenue from commercial casinos, online gaming, and sports betting reached $66.5 billion in 2023. Online gambling alone contributed approximately $17 billion to this total.
Sports betting revenue reached $10.92 billion in 2023, up 44.5% from the previous year. However, inflation and interest rate hikes have weighed on market sentiment in 2024, with ETFs like BJK and BETZ seeing minor declines earlier this year.
Hedge Funds and Institutional Interest
Hedge funds have shown growing interest in gambling stock investments. Firms like Performing Capital and Greenlight Capital have accumulated positions in gaming companies. Even former skeptics such as Jim Chanos have reversed bearish positions, acknowledging the sector’s surprising profitability.
Smaller companies like PlayAGS, specializing in slot machines, and Genius Sports, focused on sports betting data, have also drawn institutional attention, offering potential growth opportunities in niche segments.
Best Gambling Stocks to Watch for Investment Opportunities
Here are several gambling stock picks investors may consider for exposure to different segments of the industry:
- DraftKings (DKNG): A leader in online sports betting stocks, supported by aggressive expansion, a growing user base, and strong brand visibility.
- Flutter Entertainment (FLUT): Owner of FanDuel, providing extensive access to the growing U.S. and international sportsbook stocks market.
- MGM Resorts International (MGM): Balances strong performance in physical casino operations with increasing presence in digital gaming.
- Las Vegas Sands (LVS): Benefits from the recovery of international tourism, particularly in Macau and Singapore, while maintaining high-end resort operations.
- VICI Properties (VICI): A real estate investment trust offering exposure to casino properties, appealing to investors seeking income and long-term stability.
- Light & Wonder (LNW): Supplies gaming technology and content, supporting both land-based casinos and online gaming platforms.
Each of these companies offers unique exposure to different areas of the gambling industry, allowing investors to tailor their strategies based on risk tolerance and market outlook.
Final Thoughts
The gambling sector presents multiple entry points for investors, whether through direct stock ownership or diversified ETFs. As the industry expands across online platforms, mobile apps, and global markets, companies that adapt to shifting consumer habits and regulatory developments may continue to offer solid growth potential in the years ahead.
