Check out best investing opportunities in US markets in entertainment and gaming sector
Check out best investing opportunities in US markets in entertainment and gaming sector
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For over a decade there has been strong lobbying in the US for nationwide legalization of online sports betting. An outdated law was originally created to prevent criminal syndicates from influencing different sports. Thus, protecting athletes and the integrity of the game. However, due to proven government regulation methods across Europe, US states are now rushing to approve online gambling bills. Social gaming and Fantasy Sports filled the void up to now. But now there is a great opportunity for Indian investors to get in early while stock prices are still attractive. Below we outline which companies look to benefit the most from legalization and which gambling stocks have the biggest growth possibilities.

Current Environment Creating a Perfect Storm for Investors

During the ongoing COVID-19 pandemic, many brick-and-mortar establishments have been forced to shut down. So, many online businesses have seen exponential-like growth over the past year. As international vaccination campaigns are in full flow, the world’s population will still require up to a year or more to be fully vaccinated. Therefore, online businesses will continue to flourish. Moreover, people have changed their daily routines. So online shopping will continue to grow, even after the pandemic.

One of the biggest industries directly affected by COVID-19 is the tourism industry. Not only hotel and airline companies were affected, but also land based casino operators. Two of the biggest gambling hotspots, Macau and Vegas, took huge losses in the past year. If not for their online gambling services, many companies would have to file for bankruptcy. For many years land-based gambling companies vetoed online gambling as they saw this as a direct threat to their businesses. However, now they have switched sides and see the huge potential of legalization.

Today, with millions of active smartphone users worldwide, gamblers have instant access to place bets online. Therefore, many betting site operators and mobile payment companies look to reap the benefits.

India is another country with huge potential. There has been a huge rise in activity during the pandemic. Furthermore, Indian lawmakers are following the US legalization processes and have started lobbying for their own legalization. It is estimated that the current online cricket betting industry in India is valued at over $100 billion.

Top 3 US Gambling Stocks to Invest In

Even though many land-based gambling establishments have re-opened, social distancing and public fear have created less interest in booking vacations or visiting these once popular destinations. So, online gambling sites have become the number one choice among gamblers.

The main reason for their popularity is convenience. You don’t need to get on a plane or travel, or even leave your home in order to gamble. So, online gamble companies are raking in and now is the time to capitalize on their huge growth potential too.

1. DraftKings (Symbol: DKNG)

Fantasy Sports has always been popular in the US. Sports fans across the country follow their college and pro teams’ stats religiously. So, when Fantasy Sports betting was legalized as a game of skill the response was tremendous. DraftKings together with FanDuel became the two biggest companies in the industry and both scored huge endorsement deals with major US sports leagues, which has led to huge brad recognition.

Today, DraftKings offers live sports betting and casino games too in all legalized states. Their current stock price, as of writing, is at $63.80. And they hold Strong Buy ratings from Goldman Sachs and Credit Suisse. Year over year guidance for 2021 expects a 45% increase in growth.

1 Year Price target is currently set at: $72.71 (14% increase)

2. Penn National Gaming Inc. (Symbol: PENN)

Penn National Gaming was founded in 1972 and is one of the biggest gambling companies in the US. They operate 41 gambling saloons and racetracks across 19 states. PENN stock reached an all-time high of $142.00 at the beginning of the year. But the stock has seen a strong draw back recently to $104.09, due to investors taking profit.

With New York’s inevitable legalization around the corner, Penn National’s popular Barstool Sports betting app has strong growth potential. Furthermore, because the app is popular among millennials, PENN is a popular Robinhood stock and is mentioned often on the Reddit forums. Recent strong upgrades from JP Morgan and Goldman Sachs suggest that the price target could reach as high as $125, offering over 20% return on investment (ROI).

1 Year Price target is currently set at: $108.85 (4.5% increase)

Wynn Resorts Ltd (Symbol: WYNN)

Wynn Resorts has been I hot water the past few years after Steve Wynn was forced out of the company he founded, due to multiple sexual harassment lawsuits. Since his wife took over, Wynn Resorts had managed to steer the ship to safety and then the pandemic hit. Thanks to strong growth from their betting app, WynnBet, and Macau and Vegas casinos reopening too, their stock price has seen a 30% increase since the beginning of the year.

WYNN currently trades at $136.37 but their yearly price target sits at only $119.92. Worldwide vaccination efforts will surely lead to more increased international travel. So, more increased tourism will lead to more revenue at Wynn hotel resorts. Therefore, experts predict that WYNN could reach a price range of $160- $170, which it held easily prior to the pandemic, offering a potential 17%-20% ROI.

Additional Stock Options

Online gambling companies cannot function properly without help from suppliers. These suppliers may be betting and game software providers or fintech companies that provide online payment solutions. So, if you’re interested in investing in this industry, then you might be interested in the following companies too:

  • Visa Inc (V)

  • Mastercard (MA)

  • PayPal (PYPL)

  • MGM Resorts (MGM)

  • Inspired Entertainment Inc. (INSE)

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