A few years ago I was thinking about finding some ways to make money that wouldn’t be affected by a bad economy or a recession. I read that businesses based somehow in sin did well regardless of what the rest of the economy was doing.
Examples included businesses involving tobacco, sex, or alcohol.
Of course, gambling was also on the list.
That was something that interested me more than the other businesses on the list. The mathematical aspect of gambling always attracted me.
And I just like to play games.
But I can’t afford to launch a casino or any significant sized business in the industry. I could open a small underground poker room, but that’s a felony where I live. I’m not willing to take the risk.
Luckily, many companies involved in the gambling industry are public companies.
This means that anyone with the capital can invest in them.
I’ve listed 10 public gambling companies for you to consider investing in. These aren’t recommendations, as I’m not a financial professional. They’re just listed here for your entertainment and education.
1- Las Vegas Sands Corp.
The Las Vegas Sands Corp. is traded on the New York Stock Exchange under the symbol LVS. They’re the most valuable gambling company in the world, with a market cap of over $39 billion. The company is based in the United States and owns casinos like the Palazzo and the Venetian, both of which can be found on The Strip in Las Vegas.
Most of their revenue is generated internationally, though. Macau is the real center of their business. And if you think Las Vegas is a big gambling destination, you should see the crazy amounts of revenue generated annually in Macau.
Also, if you like dividend stocks, LVS has a dividend yield of over 5%. The P/E ratio, as I write this, is less than 11. I think it’s a great buy.
2- Churchill Downs Incorporated
One of the things I look for when deciding on a company to invest in is look at the earnings. I don’t invest in companies that lose money. I made that mistake years ago when I invested in MGM. I thought there was no way that their stock price could drop any further than it was at the time. I wound up losin 90% of my investment.
With that in mind, the earnings from Churchill Downs Incorporated are impressive. The company is traded on NASDAQ under the symbol CHDN. There’s nothing impressive about their 0.62% dividend yield, but the P/E ratio for the company is well under 10 at the time of this writing.
And if you don’t recognize the name, Churchill Downs is the home of the Kentucky Derby. They also recently bought a couple of casinos, so their business is expanding past just horse racing.
3- Gaming Partners International Corp.
Even if you want to build a portfolio almost entirely of gambling stocks, it’s a good idea to diversify. In other words, if you buy a bunch of gambling stocks, don’t buy stock in nothing but casinos. I’ve listed one casino company so far, and I’ve also included a horse racing company.
Now, with Gaming Partners International Corp., I’m recommending a small manufacturer of gambling equipment. Mostly, they just make playing cards and casino chips.
They’re traded on NASDAQ under the symbol GPIC. I’ve seen speculation that they might be an acquisition target for Scientific Games, but you can’t always count on that sort of thing. On the other hand, I owned stock in Marvel Comics when they were acquired by Disney, and I was pleased at the immediate premium I saw as a return on the stock when it sold.
This company isn’t quite the value as the other 2 companies I’ve mentioned. The P/E ratio is almost 15, but that’s still better than many stocks. And P/E ratio isn’t the only indicator of value anyway.
They do not offer a dividend, but that’s okay. They probably know that reinvesting their profits into the company will provide a better long-term return anyway.
4- Stars Group
I used to do consulting with PokerStars when it was still a privately held company. They still maintain a commanding presence in the search engines for a wide variety of the most competitive poker-related keyword phrases in the business. Stars Group is the new name of the company since it’s transitioned from being a privately held poker room to a major public business.
I don’t usually recommend stocks that lose money, but they’re losing such a small amount of money, and they’re so well-positioned in the industry, that I’m confident they’re still a good long term play.
Stars Group is also the only online gambling company I’ve recommended so far. They’re more than just a small poker room, too. They own Sky Betting, now, too, so they have fingers in the sports betting niche, too.
I’m predicting that sports betting will become a popular business in the United States over the next few years. When that happens, I expect Stars Group to benefit and become a big player in the industry.
The reason that the price for TSG is so low now is because of some surprisingly low earnings numbers in the most recent quarter. I don’t have an explanation for this surprise, but I’m confident that the long term prospects for the company are still excellent.
And that’s what really matters when deciding on something to invest in, anyway.
5- International Game Technology
The most popular games in any casino are the slot machines. And the biggest slot machine manufacturer and designer in the world is International Game Technology (IGT). They’re traded on NASDAQ under the symbol IGT.
I’m a fan of companies which pay generous dividends, and IGT qualifies with their 5% dividend yield. I’ve seen some analysts and pundits mention that slot machines are growing less popular over time.
I’m convinced that slot machine companies are going to figure out how to turn that around. The lean toward adding skill gaming elements to these games, a la the Space Invaders slots, are the future of that industry.
And if I’ve learned anything about millennials, it’s this:
They LOVE video games.
The company is profitable, too, and the P/E ratio of 20 is reasonable if not exciting. IGT is a good long-term play, as far as I’m concerned.
6- The Madison Square Garden Company
I’m stretching the definition of “gambling companies” with this selection, but I’m convinced that The Madison Square Garden Company (MSG on the New York Stock Exchange) stands to benefit big-time from legalized sports betting.
They don’t pay a dividend, but they are profitable. The company owns the New York Knicks and the New York Rangers, so it’s a well-known company. The market probably hasn’t undervalued the stock price, but with the change in the legal situation related to sports betting, I think it’s a strong long-term play.
Also, it’s rare to have the opportunity to invest in any kind of professional sports franchise. With Madison Square Garden Company, you’re buying a piece of 2 professional sports franchises.
7- Wynn Resorts, Limited
If you know anything about Las Vegas, you’ve heard the name Steve Wynn. He’s no longer involved in operating the comp any that bears his name, but it doesn’t matter. The company is strong—possibly stronger than it was when it was still under his stewardship.
The 2.8% dividend yield isn’t going to set anyone’s world on fire, but it’s a strong dividend for a company as large and profitable as this one. It’s also possible that the first company on this list, Las Vegas Sands, might be in the market for an acquisition.
Any time that happens, stockholders profit.
The casinos owned by Wynn Resorts—Wynn Las Vegas, Encore Las Vegas, Wynn Macau, Encore Macau, and Wynn Palace—are all well thought of and make plenty of money.
Most of us can’t afford to buy our own casino.
Thank God for the stock market, right?
With public gambling companies, you can invest money into gambling businesses that are well-run, profitable, and have good long-term prospects. The 7 companies on this list are just a starting point. Most casino companies are public.
You should do your own due diligence before investing in any company. At the time of this writing, I have no money invested in any of these companies.