In this article, we will look at the 10 Best Casino Stocks To Buy According to Analysts.
A Quick Recap of the Global Gambling Industry
The world has seen a rapid growth in online gambling recently, which is fueled by the legalization of sports betting around in many countries. The United States ban on sports betting was lifted in 2018 since then many states have moved to allow such activities online as well.
Makers of FanDuel and BetMGM have flooded the United States market with promotional content and advertising targeted at sports fans, encouraging them to participate in their fantasy leagues. Sports betting companies use various marketing techniques to cash in the sports seasons. In one of the BetMGM promotions, its brand ambassador Jamie Foxx, a movie star, encouraged sports fans to try betting on various outcomes in the game.
The advertisements have been working well to drive revenue for the companies. As per the American Gaming Association, in 2023, online sports bookmakers took more than $114 billion in Bets. Moreover, the US revenue from online sports betting reached around $16.9 billion during the same year.
After the United States, many other countries are working on building casinos to attract foreign tourism. As per a CNBC report on September 1, Thailand after Singapore and Macau is looking to develop casinos in the country. The strategy worked well for Macau as it overtook the title of the world’s largest gambling hub from Las Vegas. Singapore has been reaping the benefits as well from its two 14-year-old casinos. Thailand has now joined the race, and it is expected that the country will give tough competition to both Macau and Singapore. Its casinos are expected to generate $5 billion in revenue, which is 1% of the country’s GDP.
In one of our recent articles titled, 7 Best Small-Cap Casino Stocks Hedge Funds Are Buying, we found that Asia Pacific is one of the major contributors to the global betting industry. Here’s an excerpt from the piece:
“Legalization of gambling, rapid urbanization, increased use of social media, and rising internet penetration rate are factors driving market growth. As per the report, the Asia Pacific region is the main contributor in the global betting industry accounting for more than 32.4% of the total market valuation. The Asia Pacific region is followed by North America and Europe. Looking ahead, South America and Africa are expected to be the next hot markets for gambling and casino companies. The South American region is expected to grow at a CAGR of 23.4%, whereas Africa is expected to grow at 8%. Rapid legalization and increasing disposable income in these regions contribute to the growth.
If we look at the segment-wise analysis, the lotteries segment accounts for more than 53% of the total market value and is expected to grow at the fastest rate during the forecasted period.”
Are Sports Betting Stocks Slipping Due to the Upcoming Tax?
Illinois lawmakers are drafting a new budget that includes a sharp increase to the state tax on sports betting operators. On May 28, CNBC’s reporter Contessa Brewer mentioned that operators in Illinois have paid 15% on sports betting since it went live in June 2021. The new tax proposal is expected to increase the tax to a range of 20% to 40% depending on gross receipts. Meaning that the largest betting operators are expected to be attacked the highest with this increase.
The law is yet to be passed, but if it gets approved it will make Illinois’ highest tax rate the second highest behind New York and New Hampshire. For context, Illinois is the 4th largest state for sports betting and betters waggered more than $1.2 billion in March 2024 alone. Sports betting associations are not happy with the tax proposal. The CEO of one of the largest sports betting operators in the United States mentioned that the burden of this tax is going to shit to the consumers.
Now that we have looked at the overall gambling and casino industry. Let’s talk about the 10 best casino stocks to buy according to analysts.
A casino floor with multiple gaming tables and slot machines illuminated by neon lights.
Our Methodology
We used the Finviz stock screener to come up with stocks operating in the gambling and casino industry. First, we aggregated a list of casino stocks that were most widely held by hedge funds in Q2 2024. Next, we ranked them based on the average price target upside as per Wall Street analysts. The list is ranked in ascending order of the average price target upside as of September 1.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Casino Stocks To Buy According to Analysts
10. Flutter Entertainment plc (NYSE:FLUT)
Average Price Target Upside as of September 1: 17.04%
Number of Hedge Fund Holders: 53
Flutter Entertainment plc (NYSE:FLUT) is a major international betting and gambling company. It provides various online platforms where people can place sports bets, play casino games, and other gambling-related activities.
The company operates in Australia, the United States, the United Kingdom, and Ireland. Flutter Entertainment plc (NYSE:FLUT) manages FanDuel, one of the most renowned online sports betting platforms in the United States, along with other gambling sites including Betfair, Sportsbet, and Sky Betting and Gambling.
As per the company’s FQ2 2024 factsheet, Flutter Entertainment plc (NYSE:FLUT) captured 40% market share in the United States through its FanDuel platform. The company reached 14.3 million average monthly players during the quarter indicating a 17% increase since the previous year.
An increase in market share and more players using the company’s platform resulted in a successful financial quarter, with revenue increasing 20% year-over-year to reach $3.2 billion. Moreover, the company has also increased its revenue guidance for 2024 and now expects to generate $6.2 billion with $740 million in adjusted EBITDA.
Hedge funds find Flutter Entertainment plc (NYSE:FLUT) profitable and have increased their stake in the company. It was held by 53 hedge funds in Q2 2024, up from 21 hedge funds during the last quarter. The total hedge funds positions for the second quarter amounted to $1.72 billion.
The increasing market share of the company provides it with a strategic edge over its competitors. Moreover, the company expects that the total addressable market will reach $40 billion by 2030 and expects its market share to grow with it. Its past decade’s performance advocates for its capacity to grow with the market. Over the past 10 years, Flutter Entertainment plc (NYSE:FLUT) has grown its top line and levered free cash flow by 32%.
Wall Street analysts are also bullish on the stock. 24 analysts have a consensus Buy rating for FLUT, with their 12-month median price target of $248.61 presenting an upside of 17% from the current level.
9. Churchill Downs Incorporated (NASDAQ:CHDN)
Average Price Target Upside as of September 1: 18.01%
Number of Hedge Fund Holders: 31
Churchill Downs Incorporated (NASDAQ:CHDN) is a gambling and casino company that focuses on horse racing, online betting, and gaming entertainment. The company operates through three segments: Live and Historical Racing, TwinSpires, and Gaming. It also runs Terre Haute Casino Resort in the United States.
The Live and Historical Racing segment contributes around 42% of the yearly revenue for the company. The Kentucky Derby racetrack that the company holds, hosts one of the longest continuously held annual events in the United States, generating high margins and free cash flow for the company.
Moreover, TwinSpires is one of the largest online wagering platforms in the United States. These strategic edges that the company has resulted in a strong fiscal 2023, with revenue growing 36% and adjusted EBITDA growing 34% during the year.
The second quarter performance was also exceptional and above analyst expectations. Churchill Downs Incorporated (NASDAQ:CHDN) grew its revenue by $891 million, a 16% growth year-over-year. The growth was mainly led by a strong performance in the Live and Historic Racing segment which contributed 9%.
Earnings of Churchill Downs Incorporated (NASDAQ:CHDN) also improved significantly during the quarter, again supported by the racing segment. The adjusted EBITDA of the company grew 22% year-over-year to reach $445 million during the quarter.
Investors have confidence in management’s capability to continue driving growth for the company.
The London Company Mid Cap Strategy stated the following regarding Churchill Downs Incorporated (NASDAQ:CHDN) in its Q2 2024 investor letter:
“Churchill Downs Incorporated (NASDAQ:CHDN) – CHDN outperformed in 2Q as recent results exceeded expectations, and the 150th Kentucky Derby delivered growth above expectations as well. Additionally, in our view, the value creation from recent acquisitions is becoming clearer to the market. We continue to view CHDN as a high-quality business run by a management team with a track record of astute capital allocation and a strong pipeline of opportunities for continued growth.
Increased: Churchill Downs (CHDN) – The increase reflects our confidence in the long-term outlook for the business and our desire to reduce cash in the portfolio.”
The stock was held by 31 hedge funds in Q2 2024, with total stakes worth $673.51 million. Analysts are positive about CHDN, 10 analysts have a strong Buy rating on the stock, with their median price target of $164 pointing towards an 18% upside.
8. Accel Entertainment, Inc. (NYSE:ACEL)
Average Price Target Upside as of September 1: 28.64%
Number of Hedge Fund Holders: 14
Accel Entertainment, Inc. (NYSE:ACEL) is in the business of operating gaming machines and slot devices across various locations in the United States. The company provides gaming terminals, which are slot machines and Redemption Devices, that provide instant payouts. It also operates various Amusement devices such as Jukeboxes, pool tables, and dartboards.
ACEL is also popular among hedge funds and was held by 14 hedge funds during Q2 2024, with total stakes worth $165.95 million. Darlington Partners Capital is the top shareholder of the company with a position worth more than $83 million. Moreover, analysts are reacting to its strong financial performance. 3 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $15 pointing towards a 29% upside from the current level.
It has operations across more than 4,000 locations across the country and operates more than 25,700 terminals. Such vast market coverage results in increased revenue generation and profits for the company. During Q2 2024, the company grew its revenue by 6% year-over-year to $309 million and net income by 46% year-over-year.
The increase in gaming terminals across various locations and increased revenue generation indicates a growing market share and demand for its gaming terminals. It has grown its business locations by 5% and terminals by 6% during the year.
A robust financial performance topped with its cheap valuation presents an attractive investment opportunity. ACEL is trading at only 13 times its forward earnings, a 16% discount to its sector.
7. Codere Online Luxembourg (NASDAQ:CDRO)
Average Price Target Upside as of September 1: 33.52%
Number of Hedge Fund Holders: 5
Codere Online Luxembourg (NASDAQ:CDRO) is an online casino game and sports betting company based in Luxembourg. The company has international operations spreading across Europe, the UK, and South Africa. It operates through its website and mobile applications and is known for its partnerships with prominent sports teams, such as Real Madrid in Latin America and River Plate in Argentina.
The company enjoys a healthy revenue mix from both its major segments, casino and sports betting. During the second quarter of 2024, Codere Online Luxembourg (NASDAQ:CDRO) generated 56% revenue from its casino operations and 41% revenue from its sports betting segments. As both the segments performed well the consolidated revenue of the company grew 39% to €54.4 million ($60.22 million).
The sports betting segment witnessed more than 146,000 average monthly activities, up 16% year-over-year. The already strong business presence of Codere Online Luxembourg (NASDAQ:CDRO) is continuously growing. During the latest quarter, more than 260,000 new customers registered to its platform with a 28% conversion rate.
As a result of a strong performance during the first 6 months of the year, management has raised its full-year guidance now expecting revenue between $227 million and $238 million.
CDRO was held by 5 hedge funds during Q2 2024, with total stakes worth $2.73 million. LMR Partners is the top shareholder of the company, with a position worth $1.46 million. 4 analysts have a Strong Buy rating on the stock, with their median price target of $10.09 presenting an upside of 33.52%.
6. Gambling.com Group Limited (NASDAQ:GAMB)
Average Price Target Upside as of September 1: 37.39%
Number of Hedge Fund Holders: 11
Gambling.com Group Limited (NASDAQ:GAMB) is a digital marketing services company that publishes content about the gambling industry. The company helps large companies like DraftKings get customers through the content it publishes and gets a cut for each deposit. It publishes content through more than 50 websites, all of which are well known.
Gambling.com Group Limited (NASDAQ:GAMB) was held by 11 hedge funds in Q2 2024, with total stakes worth $21.6 million. G2 Investment Partners Management is the top shareholder with a position worth $6.67 million.
The company leverages its strong market presence to drive record revenues each quarter. It delivered more than 108,000 new depositing customers during the second quarter of 2024, presenting a 19% increase year-over-year. Gambling.com Group Limited (NASDAQ:GAMB) also benefits from the sports betting seasons and demonstrated strong growth in the US.
The financial performance of the company was ahead of expectations, its revenue rose 18% year-over-year to a record 30.5 million. Europe proved to be the most successful market for the company as the iGaming revenue from Europe grew 111% year-over-year. Its overall international revenues were also a success and improved by 70% during the same time.
Management has been effectively cutting costs and improving profit margins, during the second quarter, the company’s gross profits were up 16%, whereas operating expenses decreased 15% year-over-year.
Gambling.com Group Limited (NASDAQ:GAMB) has raised its 2024 guidance and now expects revenue of $123 million to $127 million, representing 15% and 24% increment year-over-year.
GAMB is cheap at current levels, it is trading at 13 times its forward earnings, a 4% discount to its sector. Moreover, its earnings are expected to grow by 68% during the year to reach $0.79.
7 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $14 presenting a 37% upside from current levels.
ClearBridge Small Cap Value Strategy made the following comment about Gambling.com Group Limited (NASDAQ:GAMB) in its Q3 2023 investor letter:
“In the communication services sector, Gambling.com Group Limited (NASDAQ:GAMB) was our top individual performer. A leading provider of digital marketing services to the global online gambling industry, the company saw its stock price rise after announcing second-quarter earnings that exceeded analysts’ expectations and raising its full-year guidance, and as the football sports betting season began. Gambling.com has rapidly reached profitability in its North America lead-generation business for sports betting sites, which continues to offer compelling growth opportunities as more U.S. states legalize online gambling, while its mature European business continues to see growth from improved search engine optimization. Ultimately, we believe the company’s low marketing and capital expenditures, combined with the attractive opportunities from growth in online sports wagers, will make Gambling.com a strong long-term compounder for the portfolio.”
5. DraftKings Inc. (NASDAQ:DKNG)
Average Price Target Upside as of September 1: 44.93%
Number of Hedge Fund Holders: 56
DraftKings Inc. (NASDAQ:DKNG) operates in the digital sports entertainment industry. The company offers a variety of online services related to sports betting and gaming. It operates through various key segments including online sports betting, where users can bet on various sports events, Daily Fantasy League, a pioneer app that allows users to create fantasy teams and compete based on the real-time performance of the players, and iGaming, which includes casino games for states where gambling is legal.
The company faced some headwinds due to regulatory pressure from higher tax rates on sports betting. Regardless, DraftKings Inc. (NASDAQ:DKNG) had no problem growing its revenue by 26% year-over-year during the latest quarter.
It also achieved strong customer acquisition and increased its new customer acquisition by around 80% year-over-year, while simultaneously decreasing its customer acquisition cost by 40%.
Management is putting in efforts to improve its adjusted EBITDA to bring it between $900 million to $1 billion by 2025. Moreover, the management also plans to work around the higher tax issue by rolling out gaming tax for its customers in 4 states by next year.
DraftKings Inc. (NASDAQ:DKNG) has raised its revenue guidance midpoint, now indicating a 41% increase year-over-year. Management also expects the upcoming NFL season to considerably boost its earnings.
DKNG was held by 56 hedge funds in Q2 2024, with total stakes worth $2.25 billion. Marshall Wace LLP is the top shareholder, with a position worth $359.20 million. Moreover, 38 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $50 presenting a 45% upside.
Baron Discovery Fund stated the following regarding DraftKings Inc. (NASDAQ:DKNG) in its first quarter 2024 investor letter:
“Shares of DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook in the U.S., rose during the quarter following an earnings release that showed strong market share gains and an improved outlook for future profitability. Market share capture has been driven by investment in innovative product offerings that are resulting in strong customer retention. The company also announced the acquisition of JackPocket, a digital lottery courier service. We believe the acquisition will help DraftKings achieve a first-mover advantage in many states that offer the JackPocket service but have not yet legalized online sports betting and casino gaming. DraftKings is well positioned to expand margins and generate positive free cash flow as it grows revenues alongside the rapidly expanding U.S. sports betting market, in our view.”
4. Super Group (SGHC) Limited (NYSE:SGHC)
Average Price Target Upside as of September 1: 47.43%
Number of Hedge Fund Holders: 7
Super Group (SGHC) Limited (NYSE:SGHC) engages in the online sports betting and gaming sector. It operates through two main platforms Betway and Spin.
Betway is a renowned online sports betting brand that allows users to engage in sports betting for various events and offers a user-friendly interface with extensive market coverage. On the other hand, Spin is a multi-brand online casino that provides a variety of gaming options such as table games and slot machine games.
Super Group (SGHC) Limited (NYSE:SGHC) has a strong market presence in the Americas, Africa, and Europe. With around 38% of revenue coming from the African market.
What makes the company an attractive investment option is its debt-free balance sheet with a surplus of €307 million ($340 million) in unrestricted cash. On top of this, the company left analysts astonished with record performance in FQ2 2024. It delivered record quarterly revenue of €408 million ($451 million), up 9% year-over-year. Strong revenue growth was on the back of robust performance from both its platforms.
The nibble and decisive strategies of management are paying off. Super Group (SGHC) Limited (NYSE:SGHC) is close to achieving consistent 20% EBITDA margins. For the latest quarter, it generated a record adjusted EBITDA of around $102 million, with margins at 24% indicating an 11% increase year-over-year.
The company’s online casino is gaining more traction and comprised 79% of the total revenue during Q2 2024. It has also entered into global betting partnerships with English Premier League Champions Manchester City and secured its sponsor position at South Africa’s Premier Soccer League, now known as Betway Premiership.
It was held by 7 hedge funds in Q2 2024, with total stakes worth $9.83 million. 4 analysts have a consensus Buy opinion on the stock and their median price target of $5.09 presents an upside of 47% from the current levels.
3. Rush Street Interactive, Inc. (NYSE:RSI)
Average Price Target Upside as of September 1: 49.41%
Number of Hedge Fund Holders: 27
Rush Street Interactive, Inc. (NYSE:RSI) operates as an online casino and sports betting (in-person) company. It provides real monkey online casinos, sports betting facilities, and other social games through various brand names including PlaySugarHouse and RushBet.
The company was held by 27 hedge funds in the second quarter of 2024 with total stakes worth $234.35 million. Rush Street Interactive, Inc. (NYSE:RSI) is one of the best casino stocks to buy according to analysts. 9 analysts have a consensus Buy rating on the stock, with their 12-month median price target of $14 presenting a 49% upside from current levels.
Rush Street Interactive, Inc. (NYSE:RSI) has operations in the US, Mexico, Latin America, and Canada. During the second quarter results for fiscal 2024, the company revealed that it improved its US and Canada Monthly Active Users by 24%, whereas MAUs for Latin America grew 79% year-over-year. Thereby demonstrating a growing market presence across all its operating regions.
Its iCasino segment was a success with revenue for the segment growing 40% year-over-year. The sports betting segment was also impressive and posted a 25% increase during the same time. Overall, the revenue of Rush Street Interactive, Inc. (NYSE:RSI) reached $220.4 for the quarter, up 34% from the previous year. The company has improved its earnings as a result of a robust financial performance, demonstrated by a $20 million improvement in adjusted EBITDA year-over-year.
Here is what Carillon Tower Advisers has to say about Rush Street Interactive, Inc. in its Q3 2021 investor letter:
“Rush Street Interactive is an online casino (iGaming) and sports gambling company. The company reported a strong quarter that delivered upside to investor expectations, and the Rush Street also lifted its forward guidance targets. Also aiding the stock the quarter were a few notable transactions in the online sports betting/iGaming space in which the company operates. These transactions helped to revalue Rush Street’s offerings and drive positive investor sentiment.”
2. Bragg Gaming Group Inc. (NASDAQ:BRAG)
Average Price Target Upside as of September 1: 51.09%
Number of Hedge Fund Holders: 6
Bragg Gaming Group Inc. (NASDAQ:BRAG) is an iGaming company that provides technology and gaming content for casinos and sportsbook operations. It not only runs its gaming studio that designs casino games but also operates the Bragg Hub platform that helps online casinos deliver games to its audience. The company also offers additional marketing services, payment processing, and customer services to its partners.
Bragg Gaming Group Inc. (NASDAQ:BRAG) is capitalizing on its existing relationships and building new collaborations to grow its market share as part of its USA rollout initiative. In collaboration with MGM and Borgata, the company announced the launch of its SI Gaming platform in Pennsylvania. Moreover, the company also announced the launch of Fanduel PA, a popular online sports betting and gaming platform, with Battery 365.
The revenue of the company for the latest quarter, FQ2 2024 was €24.9 million, up 0.5% year-over-year. However, the gross profits were down 10% during the same time as already expected by the company. Management finds the change in product mix to be the reason leading to loss of profit.
Regardless, management remains confident in its progress and has retained its full-year guidance of revenue between €102 million to €109 million. Moreover, to deal with the increasing operating cost management has also pointed towards strategic alternatives for the company, which is expected to bring back profitability.
Bragg Gaming Group Inc. (NASDAQ:BRAG) has demonstrated its ability to be a successful business over the past 5 years. Over the last half-decade, the company has grown its top line by 45%. Analysts are also bullish on BRAG, 6 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $7.65 pointing towards a 51% upside from the current level.
BRAG was held by 6 hedge funds in Q2 2024, with total stakes worth $3.72 million. Royce & Associates is the top shareholder with a position worth $1.39 million.
1. Inspired Entertainment, Inc. (NASDAQ:INSE)
Average Price Target Upside as of September 1: 55.04%
Number of Hedge Fund Holders: 3
Inspired Entertainment, Inc. (NASDAQ:INSE) is a gaming technology company that operates in the casino industry. It provides a portfolio of technology, content, and hardware for regulated gambling, betting, lottery, social, and leisure operators across various online and land-based casino operators.
INSE was held by 3 hedge funds in Q2 2024, with total stakes worth $1.43 million. Samjo Capital is the top shareholder with a position worth $22.5 million.
It operates through three main business segments, namely Gaming, Virtual Sports, and Interactive segment. Inspired Entertainment, Inc. (NASDAQ:INSE) has a huge market capitalization with operations in more than 35 jurisdictions. It has around 50,000 gaming machines at various locations, and 32,000 retail venues, and provides games for more than 170 digital websites.
Inspired Entertainment, Inc. (NASDAQ:INSE) has gained a remarkable position through its interactive segment. The segment has been outperforming other businesses in the past and will continue doing so in the second quarter of 2024. Interactive segment revenue grew by 40% and EBITDA for the segment was up 69% year-over-year. The segment benefited from its growing market share, new customers, and the launch of new products in various geographies.
Management had indicated at least a 50% subsequent increase in the adjusted EBITDA during its first quarter earning release, it was able to surpass its expectations and grew the EBITDA by 56.5% over the quarter. Moreover, the net income for the quarter was also impressive at around $2 million.
Inspired Entertainment, Inc. (NASDAQ:INSE) signed a new six-year contract with William Hill to supply 5,000 terminals, indicating its near-term growth prospects. Moreover, management expects an even better second half for the company.
INSE is also cheap at current levels, it is trading at 15 times its forward earnings, an 8% discount to its sector. Moreover, its earnings are also expected to grow by 96% during the year to reach $0.51. 5 analysts have a consensus Buy rating on the stock, with their median price target of $14 pointing towards a 55% upside from current levels.
While we acknowledge the potential of Inspired Entertainment, Inc. (NASDAQ:INSE) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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