Looking to diversify your portfolio? Here is our guide to understanding gambling and casino stock investment
While 2020 could?be categorised?as?a high-risk year?for the equity market, recent movements spotlight the rapid growth?and potential witnessed?across?the gambling?and casino?stock market.?We highlight the?most?transcending gambling?and casino?stock traders have their eyes?on –?with the potential for a bull run in 2021.?All data and figures are in accordance to the? time of writing. ?
Disclaimer: The following is not intended as investment advice. Do your own research.?
Big Short?
According to the?ReportLinker,?the?global gambling market is forecasted to reach $647.9 billion by 2027?while accounting for the pandemic.?In effect, the pandemic has?accelerated the trend of online betting?which,?according to?Grand View Research, is expected to reach $127.3billion by 2027.?Additionally, land-based gambling venues are predicted to pick up after the pandemic?ends?as the?vaccine?roll out will?greenlight?traveling and?entertainment.??
Like all stock, gambling?and casino?stock fluctuate based on social, economic and political changes.?A strong trend?elicited?over the past year was?the?industry entering the golden age of M&A. We observed that the health of a stock is closely related to regulatory changes or restructuring. For example, the ￡8.09bn takeover battle with MGM and?Entain?took an ugly turn as?Entain’s?market cap fell sharply by 12.5% to ￡7.3bn after MGM dropped out.?
Another example includes?Google’s?recent?announcement?that it has lifted the Play Store ban for gambling and betting?apps,?causing?a?boost?in share?prices.?According?to?Yahoo,?prices?for?Penn National?grew?by?4%,?the?Score?rose?around 7%,?and?DraftKings?spiked?up to 6%.?
Key stock trends to keep an eye?on?
DraftKings?(DKNG),?a?leading?fantasy?sports and online sport wagering provider,?merged?with Diamond Eagle Acquisition?and?SBTech?back in 2019?which?catapulted?the company into the stock market.?The reaction could be hinting towards a bigger picture, the U.S. becoming the home to sports betting (with an estimated value of $40billion according to?Motely Fool).???
American operator of casinos and racetracks,?Penn National Gaming Inc.?(PENN),?is another pioneer in the?casino?stock market. The stock currently boasts a 222.27% one-year return.?Investor’s Business Daily?highlight?that?PENN?shares are beyond buy range.?Optimism reins as analysts from Jefferies and Stifel have raised their target prices to 91 and 118 respectively.??
As the economy recovers and people have more?disposable?income, it is expected that land-based gambling venues?could bounce back in 2021.?Consequently,?Investor Place?recommend keeping an eye out for?MGM Resort International (MGM),?one of the world’s leading global hospitality companies. Bank of America analyst?Shaun Kelley?contends that MGM has the potential to become a?valuable?“story”?stock?due to its brand strength.?Furthermore,?recent?news of a?partnership?between?BetMGM, a subsidiary of MGM and?Entain?Plc, and Richard?Childress Racing?is?also?expected to catapult MGM?onto?the frontline of the online gaming industry.??
Evidently, the clear winners for 2020 were sport betting stocks,?Morgan Stanley?recommending?to buy these stocks?ahead of the curb.?Gambling stocks like Penn National Gaming (PENN) and Draft Kings (DKNG) have in fact been some of the best-performing in 2020, and are expected to bring the same momentum into 2021.?
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