Online Gambling Sector Shows Strong Growth in Gaming Industry
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The gaming industry has experienced significant growth in online gambling. Research firm Insider Intelligence estimates that the amount of money bet on sporting events in the U.S. will increase by 45% to reach almost $137 billion this year. In addition, the revenue from iGaming, which involves betting on traditional casino games online, has surged 22.7% to $1.48 billion in the first quarter of 2023, setting a new record. Brick-and-mortar casinos, on the other hand, generated $12.30 billion during the same period.
China has also seen a resurgence in gambling, with Macau’s gross gaming revenue climbing nearly 10% compared to June and almost 40 times compared to the previous year. Morgan Stanley expects Macau casinos to deliver strong Q2 metrics.
Given the strength of the gambling sector, there are several gaming stocks that show potential for investment.
MGM (MGM) has seen a strong increase in its top line, with a 21% climb last quarter compared to the same period the previous year. The company’s online betting joint venture, BetMGM, reported a 76% year-over-year increase in net gaming revenue to $476 million in Q1. MGM’s casino revenue in China also soared 454% year-over-year to $670 million.
DraftKings (DKNG) has experienced rapid expansion, with an 88% increase in its top line last quarter. The company has improved its full-year revenue guidance and is expected to enter profitability next year.
Flutter (PDYFY) owns FanDuel, which holds a 50% share of the U.S. sports betting market. The company has seen significant revenue growth and cash flow from operations. Flutter’s outlook remains attractive as sports gambling continues to expand in the U.S.
Las Vegas Sands (LVS) is considered a top pick due to its high leverage in the Chinese gambling sector. The company’s revenue and operating income have shown strong growth, and it recently resumed its dividend.
Melco Resorts (MLCO) is another company benefiting from the Macau recovery, with attractive valuation and strong Q2 results.
International Game Technology (IGT) is well-positioned to benefit from the global proliferation of casinos. The company’s revenue and adjusted EBITDA have shown positive growth.
Investors interested in the overall online gambling sector can consider the Roundhill Sports Betting & iGaming ETF (BETZ) for potential investment opportunities.
