Gambling has a rich and storied history in the US. Lotteries were the first legalized form, but over the years, the activity diversified and spread, and so did the anti-gambling movement, making it illegal in most places. It wasn’t until 1929 and the stock market crash along with the Hoover Dam project that led to the legalization of gambling in Nevada. In recent times, gambling laws are experiencing a renaissance of sorts worldwide and in the US, and gaming stocks soar.
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According to statistics, the US gambling industry contributes $137 billion to the US economy, and it employs more than 730.000 people. Naturally, Las Vegas is leading the way with annual revenues of $6.6 billion, with Atlantic City trailing behind $2.5 billion. Tribal casinos generate revenues of close to $32 billion per year, and research shows that the average American loses over $400 per year on games of chance.
Nowadays, the market is shifting to the digital sphere, as online gambling revenues grewfrom $58.9 billion in 2019 to $66.7 billion in 2020. Estimates in 2017 claimed that 15 million Americans placed a bet online, but this figure does not factor in many residents that choose to play and bet at offshore online casinos and sportsbooks.
Many gambling operators are eager to enter the US iGaming market because of the low infrastructure costs and the potential wide player-base. In the past, their biggest challenge was getting a license. All that is changing as governments realize how lucrative this market is, and its revenues from its legalization. Today, the biggest online gambling companies make up over 80% of the market share. They dominate any market they enter by providing a solid base to invest in, making online gambling stocks worth the risk.
Sports Betting Stocks in the USA
May 14, 2018 was a turning point as the US Supreme Court lifted the federal ban on sports betting. The 6-3 decision ruled that the Professional and Amateur Sports Protection Act was unconstitutional and infringed upon states' rights to regulate the activity. Immediately following the decision, eleven states moved to legalize sports betting within their borders. That number might grow to 34 by 2024, as the market will generate to $5.7 billion per year.
Some speculate that a more optimistic scenario will transpire, as Florida and California will be among those that legalize the activity. The overall number might be 40 states with annual revenues of $8 billion by 2024.
What makes the US market enticing is that Americans have deep cultural connections with national sports, and college sports have a level of competitive organization and popularity not seen elsewhere. Many sportsbooks allow betting on college sports. Another contributing factor to the allure of the market is that Esports betting in the US is on a tremendous rise. It is one of the world’s most popular and profitable esport regions, with annual games sales reaching $43.4 billion in 2018.
Sports Betting Stocks to Consider
At present, 19 states allow people to place bets on sporting events, and another four have received the green light but are yet to be operational. Opportunities are growing as the market is expanding.
DraftKings is the most well-establish fantasy sports website in the country, holding 60% of the market share. In December of 2019, it announced a merger with SBTech and Diamond Eagle. The deal aims to create the only vertically integrated US sports gambling company that holds a desirable place.
MGM Resorts International may be synonymous with the “best casino stock”, as the juggernaut runs about thirty land-based gaming venues throughout the US and China, with a possible project in Japan. Now it is branching off into sports betting as well. In January of this year, Nevada approved MGM and GVC Holdings to launch digital sports betting. In July, the pair stated that they commit to the second round of investments bringing their total to $450 million.
Boyd Gaming is another powerhouse to look out for, as it not only operates twenty-four gaming facilities in seven states, but it also owns a piece of FanDuel. In August 2020, the two announced the debut of the Par-A-Dice Sportsbook in Illinois. Users across the state will now have access to the FanDuel's platform.
What ABout the Online Casino Market?
While many have hastily taken to the legalization of sports betting, the USA online casino industry is not keeping pace. New Jersey is currently the largest regulated market, where over a dozen licensed platforms vie for supremacy. Recently, giant companies such as the Canadian Score Digital Sports Ventures, a subsidiary of the theScore, entered the market, and so has casino giant Wynn, and UK iGaming pioneer Playtech. Online casino revenues hit $87.5 million in the state in June of this year.
Otherstates that allow online casino companies to establish and operate in the US include Pennsylvania, West Virginia, and Delaware. Michigan will be getting its first online casinos soon, and depending on how the licensing process goes, the first platforms could pop up as early as October or as late as the start of 2021. Given that the state has a population of around ten million, it will become the second-largest iGaming market after Pennsylvania. Now, any of the three commercial casinos and the twenty-three tribal ones can partner with online gambling operators to offer online casino games. Going by estimates, Michigan online casino games and poker could bring in close to $270 million annually.
Over the next few years, experts expect to see online casinos go live in other states across the nation, despite opposition from land-based establishments. Some see this as inevitable, given the interest from international iGaming brands and the potential tax revenues. However, these developments will happen much slower than what’s happening in the sports betting sector.
US Online Casino Stocks to Consider
When on the topic of best casino stocks in the online sphere, we must mention that Landry's subsidiary, Golden Nugget Online Gaming, announced coming to Michigan. Billionaire owner, Tilman Fertitta, stated that he has partnered with Ojibwa Casino to seek regulatory approval. His plans are spending $4 million to enter the market and a further $13 million over the next two years. The company will go public this quarter, and its trading symbol will change from LCA to GNOG.
Game Account Network is also worth looking, as the company launched online casinos in Pennsylvania alongside the Cordish Gaming Group. The PlayLive! brand debuted in the Commonwealth of Pennsylvania 72 days after the execution of the agreement. In January, GAN announced that it signed a long-term deal with the FanDuel Group, and their revenues in the second quarter of this year rose 99%.
For a safer choice when looking at online casino stocks, investors can pay attention to Scientific Games, the Nevada-based leader in gambling products and services. In 2012, its subsidiary, WMS Industries, formed Williams Interactive to serve the global online gaming industry. Since then, some major brands such as Unibet and Betsson have partnered with Williams Interactive, and many online casinos house WMS slots.
Offshore iGaming Market
According to Grand View Research estimates, worldwide online gambling should reach a market size of $127 billion by 2027, growing at a rate of 11.5% from 2020 to 2027. To illustrate the growth rate, we can mention that the market size was $47 billion in 2018.
Currently, the EU is the largest and most competitive market for online gambling. In 2018, it held 49% of the global market share, and the EU market grows at 10% per year. Though gambling is illegal in most of India, some sites partner with offshore agencies, thereby allowing Indians to place online bets, as the market value will rise by 400% in the next decade.
Due to regulation in the USA, most residents seek iGaming entertainment elsewhere. This practice is common even in states that have legalized online casinos since superior platforms exist internationally. However, as these platforms become more commonplace in the US, and as more companies enter these markets, the sites will rise in quality. Residents will partake in games of chance at online casinos that operate on American soil.
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