The ongoing COVID-19 pandemic has wreaked havoc on businesses worldwide, particularly in the stock market. The gambling industry is almost certainly going to be one of the hardest hit by this. This sector has experienced year-on-year growth, as is customary. Nonetheless, the market experienced an 8 percent decline in 2020 as a result of casinos closing for extended periods of time. Annual revenues of companies in this sector have fallen for only the second time in the last two decades.
According to recent projections, the global market is expected to grow from $465 billion in 2020 to $516 billion in 2021. However, experts predict that gambling will return to pre-pandemic levels in the near future.
It should come as no surprise that the Asia-Pacific region accounts for 38 percent of the global market. For example, despite the fact that gambling is heavily regulated in Singapore, investors from all over the world are putting their money into casinos there, and they are winning.
North America is last, accounting for only 29 percent of the total cash flow generated by gaming worldwide. Reel-spinning games, on the other hand, are the undisputed kings of casino products, accounting for 70% of profits at physical locations. Furthermore, slots can be played online, where the odds are comparable, leading to the prediction that just this subset of the industry will generate $158 billion annually by 2028.
The five gambling stocks listed below are considered safe bets by a number of industry professionals in 2021. These are all well-established companies with proven track records, and their respective businesses should see significant growth in the coming years. These could be a very profitable investment opportunity for business owners in 2021.
What is the Difference Between Gaming and Gambling?
Properties for Gambling and Recreation
Gaming and Leisure Properties, located in Wyomissing, Pennsylvania, is a REIT, which stands for a real estate investment trust. They were formed late in 2013 as a corporate spin-off from Penn National Gaming with the intention of specializing in casino properties. Gaming and Leisure Properties currently owns fifty casino estates, but the company only manages one of them. The image you’re looking at is of the Hollywood Casino Baton Rouge in Baton Rouge, Louisiana.
They rent properties to companies like Bally’s Corporation, Boyd Gaming, Caesars Entertainment, and Penn National Gaming. Their most recent agreement with Bally’s Corporation resulted in over $600 million in acquisition financing and more than $60 million in annual rent revenue. The company has a strong track record of successfully putting deals together through innovative means and consistently paying out dividends to investors at rates greater than 5%. Their stock price has already surpassed levels before the pandemic.
Melco Resorts and Entertainment Inc
Melco Resorts & Entertainment is a Hong Kong-based international resort owner, operator, and developer. Casinos can be found at the company’s properties throughout Asia and Europe. They began operations in 2004 as a joint venture between Crown Limited and Melco International. The company has annual sales of more than $5 billion and is currently constructing the City of Dreams in Cyprus, which when completed will be the most impressive casino resort in all of Europe.
Melco’s primary market focus has consistently been Macau. Recently, it was announced that travel restrictions imposed from mainland China would be lifted, and investors believe that this change will benefit MLCO stock. Which has experienced both gains and losses in recent years, but Bank of America maintains its buy rating on the security.
VICI Real Estate
VICI Properties, another real estate investment trust, was spun off from Caesars Entertainment Corporation in 2017 to become its own independent company. They own several racetracks and four golf courses in the United States. They also have twenty-nine casino resorts. Caesars Entertainment declared bankruptcy in 2015, and VICI was reorganized as part of that process.
In February 2018, they successfully completed their initial public offering on the New York Stock Exchange, raising a total of $1.2 billion. As a result, their corporate headquarters were relocated from New York City to Las Vegas. MGM Growth Properties was purchased by VICI in August 2021 for a total price of $17.2 billion. They amassed 660 acres, making them the largest landowner on the Las Vegas Strip. VICI stock reached an all-time high in the summer of 2021, paving the way for even more growth.
Wynn Resorts & Casinos
Wynn Resorts is a publicly traded corporation based in Paradise, Nevada. The company is listed on the NASDAQ. It has now been in operation for nearly two decades. Steve Wynn, a well-known real estate developer and former CEO of Mirage Resorts, was one of the company’s co-founders, along with Japanese billionaire businessman Kazuo Okada.
This organization is responsible for the development of six different properties, which are located in Macau, Massachusetts, and the Las Vegas Valley. As part of their strategy to make significant strides in the realm of digital betting, Wynn Interactive, their online gaming division, will soon begin trading under the ticker WBET. Despite the fact that its stock price is now half of what it was in 2018, Wynn Resorts has been able to recover from the pandemic shock. Despite this, given its current position and prospects, an investment in this company may be a good idea.
In the hospitality and gaming industries of Nevada, the behemoth that is Boyd Gaming stands out. Bill Boyd, Sam’s son, is the primary manager of the business, which is owned and operated by Sam Boyd’s family. They own 15 different hotels, which have a combined total of more than 7,500 guest rooms, and they have more than 25,000 employees.
The Boyd Gaming Corporation owns casinos in several states in addition to Nevada, including Mississippi, Kansas, Illinois, Louisiana, Pennsylvania, Indiana, Iowa, and Missouri. Boyd Gaming had its best quarter ever in the first three months of 2021, breaking every record that had been set since the company went public. According to the opinions of industry analysts, not only do they have a stronger financial profile than their rivals, but they also have the potential for long-term expansion.
A Few Parting Thoughts
For the time being, it appears that investing in any of the five entities mentioned above could be a profitable investment in 2022. Other companies worth looking into include Churchill Downs, DraftKings, IGT, Red Rock Resorts, and Penn National Gaming.