Online Gambling Stocks List
Published on April 20th, 2020 by Harvi Sadhra
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Online Gambling Related ETFs Recent Technical Analysis Signals Related Stock Lists: Gambling Sports Betting Games Game Casino Casinos Entertainment Gaming Internet Gambling Lottery Wagering Las Vegas Valley Mgm Resorts International Retail Slot Machine Slot Machines Stronach Group Table Game Affinity Gaming Berman. First on this list of gambling stocks to buy for the iGaming megatrend is DraftKings. DraftKings is the most widely known iGaming platform in America, with over 12 million registered accounts. The above list makes it apparent that online gaming has emerged as a major segment of the entertainment industry. With mobile games, pay-to-play games, and free-to-play (F2P) games becoming even more creative, it is expected that the global online gaming market will grow at an immense rate. Sports Betting: 4 Stocks To Bet On. Analysts at Bank of America/Merrill Lynch expect Caesars to benefit from online gaming in New Jersey and online and land-based gaming in Pennsylvania, both.
This is a guest contribution by Harvi Sadhra of Hashtag Investing. Hashtag investing is an exclusive community for active investors to get real-time feedback and discover compelling stocks and strategies any time.
At the height of COVID-19, gaming stocks are making new highs. As the world is locked indoors due to the pandemic, more people are joining the gaming world.
While gaming stocks are typically not the type of high quality dividend growth stocks we cover on Sure Dividend, they have performed especially well as of late.
Gaming stocks like Zynga (ZNGA) and Activision Blizzard (ATVI) recovered from the March sell-off and rose more than 20% and 12% YTD (year-to-date), outperforming the S&P 500 Index, which fell 14%.
Welcome To The Lucrative World Of Gaming
Even before the pandemic, the video game industry was lucrative, growing 7.2% YoY (year-over-year) in 2019. Video games are gradually becoming the preferred form of entertainment. Data from Newzoo and Comscore shows that global video game revenue of $148.8 billion surpassed worldwide movie box office collection of $42.5 billion in 2019.
The significant change in the technology and business models of the gaming industry is driving growth. Video games have expanded beyond consoles to PCs and mobile. Thanks to high-speed internet, game developers have gone digital. Instead of buying video game packages, gamers can download games, subscribe to cloud gaming services, and make in-gaming purchases like new missions and player skins to enhance their gaming experience.
Similar to other physical sports, video games have sporting events called esports, where professional gamers compete in front of millions of viewers. According to Newzoo, 443 million people watched esports in 2019, and this number is expected to reach 495 million in 2020. The secret to succeeding in gaming is developing games that generate a loyal fan base for sequels, prequels, and merchandise goods.
2020 – A Good Year For Gaming
2020 is a good year for gaming stocks. We bring to you the top five NASDAQ gaming stocks which you should have in your portfolio. The stocks were selected based on their liquidity, growth, and fundamental strength.
Top Gaming Stock #1 – Activision Blizzard
Activision Blizzard is the world’s largest pure-play video game company with $6.5 billion in annual revenue and $51.8 billion market capitalization. It earns revenue by selling video games and services for game consoles (30%), PCs (26%), mobile devices (34%), and others (10%). Game services include in-game purchases and merchandise while the others segment includes proceeds from esports events.
Activision Blizzard has one of the most robust franchisee catalogs including World of Warcraft, Call of Duty, StarCraft and Bubble Witch, Diablo, and Overwatch. It earns 76% of its revenue from digital channels and 24% from retail and other sources. Activision Blizzard also broadcasts professional Overwatch matches on Disney’s (DIS)ABC networks, the Disney Channel, and ESPN.
In 2019, Activision Blizzard’s revenue fell 13.5% YoY, while its free cash flow rose 3.4% YoY to $1.7 billion. With a net cash position of ~$3.2 billion, it is well-placed to withstand the crisis and pay a dividend. The stock is making a new 52-week high of $67 amidst the pandemic.
Top Gaming Stock #2 – Electronic Arts
Electronic Arts (EA) is another video game giant with annual revenue of $5.5 billion and a market cap of $32.8 billion They offer games and services for consoles, mobile, and PC, and earn ~75% of revenue from digital channels. However, EA is more dominant in game console sales, earning 70% of its revenue from here. It earns 15% revenue each from PC and mobile games, and is witnessing increasing growth in mobile games.
EA has some of the best sports game franchises like Madden NFL, NCAA Football, NBA Live, and FIFA, and it is monetizing these games on esports. It also has an exclusive agreement with Disney for the rights of the Star Wars franchise. The franchisee licenses limit EA’s scope for merchandise sales. Its largest source of revenue is live services like in-game purchases, extra content, subscriptions, and esports. EA plans to monetize its games like Apex Legends and Battlefield through esports.
EA has a stronger cash position than Activision Blizzard. EA generates a higher free cash flow of $1.76 billion and has a more substantial net cash position of $4.6 billion. Its stock rose 5.7% YTD to its 52-week high of $114.47.
Top Gaming Stock #3 – Take-Two Interactive
Unlike EA and ATVI, Take-Two Interactive (TTWO) is a smaller player with estimated annual revenue of $3 billion and a market cap of $14 billion. However, similar to EA, Take-Two has a larger exposure to game consoles, which contribute to 85% of its revenue. It earns the remaining 15% revenue from PC and other platforms. It has less exposure to esports but has the potential to expand.
Take-Two’s biggest franchise Grand Theft Auto has the potential to become an esports game. Its other popular franchises include Red Dead Redemption, NBA 2K, and WWE 2K. Unlike EA that earns more than half its revenue from live services, Take-Two earns only 37% of its revenue from live services. Its major source of income is full game spending.
Take-Two Interactive is estimated to have a free cash flow of over $500 million and a net cash position of over $2 billion in fiscal 2020.
Top Gaming Stock #4 – Zynga
Another smaller player in the video game space is Zynga (ZNGA), which widely caters to the mobile platform. All its mobile games are free and it earns most of its revenue from in-game purchases and other live services. Some of its biggest franchisees are Mege Dragons, Empire & Puzzles, and Slots. It draws 90% of its revenue from mobile and 10% from advertising.
In 2019, Zynga’s revenue rose 46% YoY to $1.32 billion, and free cash flow rose 52.5% to $239 million. It has a net cash position of $790 million. Zynga is a high-growth stock increasing 21% YTD and has a market cap of $7.12 billion.
Top Gaming Stock #5 – NetEase
Adding to the above four American companies is Beijing-based NetEase (NTES), which develops PC and mobile games and also distributes games of Activision and Microsoft’s Mojang in China. NetEase largely caters to China, Japan, and other Southeast Asian markets. It has franchises like Westward Journey, Knives Out, and Identity V. Apart from gaming, it offers other online services like advertising, email, e-commerce, and music streaming.
NetEase revenue rose 15% YoY to $8.4 billion and generated free cash flow of $1.95 billion in 2019. NTES stock rose 6.1% YTD and has a market cap of $46.2 billion.
Good Gaming Mix
The above list is a mix of large players such as ATVI, EA, and NTES, high growth stock ZNGA, and a mid-cap stock TTWO. ATVI, EA, and TTWO peaked in Q3 2018 and then came crashing down as China froze gaming license approvals. These three stocks performed in line with the S&P 500 Index in 2019. Now, they are on a growth spree and have the potential to reach their 2018 levels as the covid situation, and regulatory environment works in their favor.
On the other hand, ZNGA and NTES outperformed the market in 2019 and see strong growth momentum in 2020 as well.
The casino gaming industry is constantly in a state of influx because of untapped markets and rapidly changing technology.
Potential goldmines like Japan and Brazil offer opportunities for major land based casinos to continue growing. And virtual reality gives the online gaming world a new dimension.
You can be sure that publicly traded casino companies will try to take advantage of upcoming technology and/or new markets.
That said, let’s look at 7 public casino companies that are eyeing major growth over the coming years.
1. Las Vegas Sands Corp.
Las Vegas Sands is the world’s largest casino company with over $14 billion in annual revenue.
This makes it seem like they don’t have much room for growth. And Sands has recently struggled because their Macau properties were stuck in the middle of a casino recession.
But the Sands Corp. is poised to take off in the future for two major reasons:
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1. Macau’s gaming market is on the rebound.
2. Sands never stops looking for new areas to expand to.
Beginning with the first factor, Macau started their downturn in 2014. This is the point when the Chinese government began cracking down on money laundering and government corruption.
Many Asian high rollers were targeted during the money laundering investigations. Eventually, Chinese high rollers stopped pouring into Macau over fears that they’d be hassled.
The good news, though, is that the anti corruption campaign is slowing and Macau casinos are rebounding. This works for Las Vegas Sands, which owns the following casinos in the special administrative Chinese area:
- Sands Cotai Central
- Sands Macao
- The Parisian
- The Venetian Macao
The Sands Corp easily survived the Macau recession because they’re so focused on diversification. They have properties in Las Vegas, Macau, Singapore, and the American East Coast.
And they’re looking to expand their reach to both Japan and Brazil in the future.
Japan is the most realistic venture because the country legalized casino gambling at the end of last year. Las Vegas Sands has pledged to build a resort worth up to $10 billion.
Japan has 127 million residents and the world’s third largest economy. This is why many see the Land of the Rising Sun as the world’s next big casino market.
Sands is also looking into Brazil as a potential casino destination.
The only problem is that Brazil is years away from legalizing casinos. But this is still a country worth lobbying in because they have 207.7 million people.
2. MGM Resorts International
MGM is the biggest rival to Las Vegas Sands because they earn $9.5 billion per year and have properties in both America and Asia.
MGM is especially dominant on the Las Vegas Strip, where they own everything from casinos to arenas. Here’s a look at their Vegas Strip properties:
- Adventuredome
- Aria Resort & Casino
- Bellagio
- Circus Circus Las Vegas
- CityCenter (jointly owned with Dubai World)
- Delano Las Vegas
- Excalibur
- Luxor
- Mandarin Oriental
- Mandalay Bay
- Mandalay Bay Convention Center
- Mandalay Bay Events Center
- MGM Grand Las Vegas
- MGM Grand Garden Arena
- Monte Carlo
- New York New York
- Skylofts at MGM Grand
- Slots A Fun Casino
- The Mansion at MGM Grand
- The Signature at MGM Grand (jointly owned with Turnberry Associates)
- The Mirage
- T Mobile Arena (jointly owned with AEG)
- Vdara
- Veer Towers
Casino gaming isn’t booming on the Vegas Strip, but entertainment and other ventures are. This is why MGM is poised for success with venues like their new T Mobile Arena, which hosts concerts and conventions.
The company has done well at expanding across the US. They own casinos in Atlantic City (Borgata), Biloxi (Beau Rivage), Detroit (MGM Grand), Maryland (MGM National Harbor), and Massachusetts (MGM Springfield).
Where MGM looks to really gain the most growth is their Macau properties. They own Grand Macau and will soon open Casino Cotai.
As covered before, the Macau casino market is on the upswing. And this means that MGM could earn some major profits in the coming years.
MGM is also under consideration for a Japanese casino license, which would be very lucrative.
3. Amaya Inc.
The online gaming company Amaya made waves in 2014 when they purchased PokerStars for $4.9 billion.
The Canadian business didn’t immediately capitalize on their investment because online poker’s popularity has been steadily decreasing over the years.
It also didn’t help that former CEO David Baazov stepped down after he was indicted on insider trading allegations.
Amaya weathered the storm, though, and have been diversifying their assets over the past few years.
The company is focused on building their casino and sportsbook products while keeping internet poker steady. The plan is working too because their casino and sportsbook now account for over 25% of their revenue.
The entire reason why Amaya purchased PokerStars for such an outrageous price is that they saw value in the customer base. The company’s number of registered users has grown to over 108 million.
It appears that Amaya’s strategy of offering more than just poker is paying off. And they’re also in the midst of changing their image too.
The company will soon change its name to the Stars Group and move their headquarters from Montreal to Toronto. This should help in distancing them from Baazov’s insider trading scandal.
4. Wynn Resorts
Wynn Resorts has done a fine job of creating a luxury casino resort brand that spans from Las Vegas to Macau.
But Wynn has also struggled too because of their Macau properties. They own the Wynn Macau Resort, Wynn Palace, and Encore at Wynn Palace – none of which were immune to the Macau recession.
But like the Sands Corp. and MGM, Wynn should rebound nicely along with the Asian gaming destination’s economy.
Another move that will help the company experience more growth is their upcoming property in Massachusetts. Wynn is currently building Wynn Boston Harbor just outside downtown Boston.
The $2.4 billion venue will feature 629 hotel rooms, restaurants, retail outlets, convention space, and a spa.
Wynn hasn’t forgotten about their Las Vegas roots either.
CEO Steve Wynn announced that he’s overhauling the Wynn Las Vegas by 2020. The renovations will include more nongambling activities along with a clear water lagoon.
5. Net Entertainment (a.k.a. NetEnt)
Net Entertainment has been running internet casinos and supplying online software since the mid-1990s.
This makes them one of the oldest companies in online gaming. And they don’t show any signs of slowing down in the near future either.
NetEnt has produced a number of top online slots hits over the years. Here are some of their most popular games:
- Aliens
- Arabian Nights
- Blood Suckers
- Blood Suckers II
- Dead or Alive
- Drive: Multiplier Mayhem
- Gonzo’s Quest
- Guns N’ Roses
- Hall of Gods
- Jack Hammer
- Jack Hammer 2
- Mega Fortune
- Mega Joker
- Starburst
- Wild Wild West: The Great Train Heist
Net Entertainment has also done a great job of entering the live dealer gaming space. They now feature different variations of live blackjack and roulette games.
They’re also quite good at adapting to industry trends.
Online Gambling Companies
This is why we see Net Entertainment continuing to lead the internet gaming world for years to come.
6. Genting Group
No casino company is more international than the Genting Group.
The Malaysian business has properties in China, Hong Kong, Singapore, the Caribbean, the UK, and the US. Here are some of their notable establishments:
- Resorts World Manilla
- Resorts World New York
- Resorts World Sentosa (Singapore)
- Crockford’s Club (London)
- The Colony Club (London)
- Genting Chinatown Casino (London)
This company has also planned projects in South Korea, Las Vegas, and Miami, Florida.
Based on their experience in navigating international casino waters and continued growth, we expect the Genting Group to continue spreading their brand.
7. Boyd Gaming
Boyd Gaming is different from the other companies on this list because they have a narrower focus. Specifically, Boyd Gaming builds regional casinos in the United States.
They currently feature 22 casinos throughout eight states, including Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Nevada, and New Jersey.
The company did have one major hiccup in 2006 when they were building a Las Vegas Strip casino. But they were forced to abandon the project and sell the property for $350 million.
In hindsight, this was a good turn of events because Boyd avoided opening a Vegas casino during the American recession (2008 10). Since then, they’ve continued to thrive by serving different regions in the US.
Boyd Gaming also has an internet gaming partnership with California’s Pala Interactive and GVC Holdings (under former bwin.party brand). This puts the business in a good position to take advantage of the US online gaming market when it finally expands.
Conclusion
The casino gaming world is far from reaching its peak. This is why publicly traded companies continue to invest in new properties and lobby governments to legalize gambling.
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The question remains which of these companies gain the most from budding casino markets and new technology.
Las Vegas Sands has proven successful at winning over government officials and earning casino licenses. This includes when they won the right to build the Marina Bay Sands in Singapore over MGM.
Both companies will square off in Japan again with another casino license on the line.
Another thing to watch in the publicly traded gaming world is the development of Amaya.
I covered how the internet gaming giant has been diversifying to casino gaming and sports betting. Will they eventually become a giant in the online casino world?
It’ll also be interesting to see how Genting World’s new projects come along because they’re set for expansion in Miami, Vegas, and South Korea. Perhaps they can grow to the level of MGM and Sands Corp if these projects go well.
Publicly Traded Online Gambling Stocks List
I’m also interested in any up and coming businesses that could break into the upper echelon. That being said, it’ll be fun to watch these developments in the coming years.