The House Always Wins
The American Gaming Association (AGA) has revealed that over $40 billion in revenue has been spun off by casinos in 2018, a record for the fourth year running. Odds on them making it five?
While the rest of the US market trades on flat growth expectations, the gambling industry is only looking up! Investors who dubbed this a “dirty” industry are now giving it a closer look as the legalization of sports betting helps it to yet further revenue records. 30% of casino earnings controversially go towards state finances, and with legalization being the catalyst for more casino license applications up and down the country, many states are welcoming in the bookies.
So, with casinos jam-packed full of punters, how do you place your own bet on gaming stocks? Analyst, Dan Wasiolek of Morningstar, sees “MGM and Caesars well positioned” to expand outwards of Vegas. Established casinos in the USA’s major cities certainly face an influx of competition as hopeful betting houses chase growth. Jeffries analyst David Katz warns that new entrants “are chasing thinner and thinner returns” as they battle for share, especially as the industry looks ripe for a shake-up with mobile sports betting. “Picking a winner can be difficult,” he goes onto say, so investors, tread carefully.
Leading gaming stocks like Wynn Resorts and Las Vegas Sands likely have the growth formula in front of them. However, investors looking to moralize their holdings might want to steer clear of the Vegas Strip. The AGA warned in this year’s report of a black market formed of “offshore sports books and street bookies.” Ethical considerations are fair game in stock-picking, feel free to quit while you’re morally ahead.
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