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Any solid investment involves a number of components. So far this year, the stock market has experienced a steep rise, defying original predictions at the start of the year. The dichotomy between the stock market and the overall economic health in the West is an odd one to explore, especially in the first half of 2023. While there have been problems with inflation, especially in the UK, and a cost-of-living crisis that has squeezed the disposable income of millions, the stock market is surging, and people with investments are benefiting from solid company growth.
While this is a more general point, and not all investments are going so smoothly, there have been many sectors where the stock performance has surprised even the most vocal critics and naysayers. One industry that has continuously bucked this trend, especially over the last 12 months, is the gambling industry, which is experiencing somewhat of a golden age. Casino companies are becoming some of the most sought-after and reliable stocks on the market, resulting in a multibillion-dollar influx from some of the most prominent institutional investors in the world.
What’s fuelling the industry growth?
As with any industry experiencing a global, multibillion-dollar resurgence, key determining factors are pushing the stock’s value to new heights. In the gambling sector, from a customer perspective, there have been a range of ingenious new ways to gamble, which have proven to be a hit and ultimately brought in a whole wave of new customers. For example, in land-based casinos, for years, gamblers were restricted in their payment methods; you could only use cash or credit cards, and most still operate in this way today.
Innovative payment systems
This is a standard method of operation for land-based casinos, given how they provide their services. It wouldn’t be economical or wise for land-based casinos to begin accepting cryptocurrency or PayPal, as it would be much less cost-effective than it is for a digital operator. PayPal is one of the most common ways that people send money online. Those casinos that got in the door early and started offering this particular payment method before their competitors witnessed a sharp increase in user activity and profit. Identifying the best online casino that accepts PayPal is crucial if you’re new to the sector, as hundreds now offer this service. To get value for money and the most out of your experience, it is crucial to find the best online casino.
Digital providers are equipped to provide new payment methods, and with so many now offering up to a dozen fresh payment methods, this has become a lucrative avenue and helped to generate the sort of multimillion-dollar profit which has caused large institutional investors to sit up and take notice.
Convenience for the customer
Any industry CEO will tell you that customer convenience is critical regardless of the industry. Providing the optimum experience and maximum convenience can allow companies to grow to enormous sizes. For example, when Jeff Bezos started Amazon from a garage, he probably didn’t envisage it would become a multitrillion-dollar global enterprise. However, one thing that Amazon did better than its competition was to provide a platform for a seamless and convenient service.
Amazon became the global one-stop shop for people looking to purchase a whole range of items online. It essentially became a megastore with the lowest prices and often the fastest delivery times. Amazon’s turnaround from order to warehouse to customer was so impressive that it helped fuel the company’s growth to astonishing proportions. Although they have recently experienced a slight dip in their profits, customer convenience set Amazon far ahead of the chasing pack, and they became only the second company in history to be valued at over a trillion dollars.
While this might seem to be a convoluted way to describe what is happening in the casino industry, it is experiencing incredible growth for the same reasons. Instead of having to gamble in a casino, where you need to give up time and spend money to travel to the building before you have even had the chance to place your bet, an online casino can be played from home without having to worry about additional costs. In addition, online casinos generally offer a better variety of games and other benefits, such as enhanced welcome bonuses and promotions, which are difficult to obtain in a land-based casino.
This convenience encourages people to play these casino games online, putting more money into the pockets of digital casino providers and sending profits on a sharp upward trajectory. Ultimately, the convenience is driving the increase in customers, who are driving the surge in profits, which results in a highly lucrative financial proposition for investors looking for a strong and stable investment.
Top casino stocks
When we break down the casino industry, the best stocks are often conglomerates that operate within the sector and control multiple avenues. For example, Wynn is a huge company that controls several casinos in Las Vegas, and they also have a significant interest in Macau, the number one gambling region on the planet in terms of profit.
Wynn has historically been a good investment, as they initially made their name in the 1970s and 1980s when they took controlling stakes in some of the top casinos and hotels in Las Vegas. This diversification of assets makes them one of the top-performing company stocks in 2023. Their primary holding is in casinos, and this is their main profit, but with their investments also stretching to the hotels that help facilitate a broader package of entertainment and gambling in Las Vegas and Macau, they have invested in the whole gambling package as a product and holiday rather than just the casinos themselves.
Wynn stock is up 11% this year, and although it took a sickening hit throughout 2020, the stock has rebounded sharply, and the company is currently valued at around $12bn.
Las Vegas Sands is another company stock that falls nicely into this category. Although they are four times the size of Wynn in market cap, with a strong interest in many crucial gambling territories, there is still significant room for growth. As a company with such a significant chunk of the market, any favourable news that impacts the gambling industry, especially in America, will invariably cause a spike in the stock price of LVS. The market conditions look favourable, as many states are exploring the process of legalizing sports betting and online casino gaming. So, this stock, despite being well established, could still provide value.
Best performing stocks
DraftKings, the online sportsbook and casino provider, has doubled in price since the start of the year. This puts the stock’s price within the highest gainers out of any industry on the NASDAQ for the first six months of the year. With a staggering 115% gain, there is likely to be a retraction in their price, as the colossal growth has been due to several favourable legislative moves in the United States. Now that this news has permeated the industry, and the stock price reflects this expansive growth, DKNG might not be the best value for investment from here on out for the rest of 2023.
However, it is undoubtedly the best-performing gambling stock over the last six months, thanks to its diversified sportsbook and casino operation. Their casino service is highly revered and has won multiple awards, which has helped the company generate the sort of profit and investment that has resulted in the size of the company doubling in 2023.
Conclusion
It doesn’t appear that investment within the gambling sector, especially casino companies, will slow anytime soon. With so many companies looking to enter the space due to the favourable legislative changes, it is one industry that might even prove to be one of the biggest in the long run until the end of this decade.
Technology sectors such as AI have stolen the narrative and are seeing more significant investment than the gambling industry. Despite this, as a mid to long-term investment, a lot of investors have commented on the fact that there’s now so much robust and institutional investment from investment banks, hedge and pension funds that there’s now a solid bedrock of capital that will help to insulate these companies in the event of a market downturn.
Traditionally, gambling companies have always performed well, even during times of economic downturn. The casino industry in Las Vegas was considered one of the best-performing sectors and some of the most reliable stocks, even during volatile periods throughout the 1980s. With this digital revolution that we are witnessing with the explosion of smartphone usage, the casino game designs are now being tailored to customers who prefer to gamble this way. In addition, to gambling companies catering to smartphone usage, there has been a consider increase in the investment and quality of the games, so the future is looking quite optimistic for a range of companies operating at the top of this industry.
