The battle for betting supremacy is heating up in the US. As one streaming giant makes its move to acquire NFL streaming rights, another is gearing up to be the biggest bookmaker in the country. Football betting is beginning to shape up as a major revenue generator in the country. Just 7 years ago, the sports betting volume in the country stood at $400 million. In 2024, a whopping $14.2 billion was spent on sports betting! People have taken a liking to enhance the thrill and excitement of live sports viewing and many companies are taking full advantage of that.
This rise in the use of bets to enhance the viewing experience is an attractive investment opportunity for investors. The gambling sector consists of many small caps that could skyrocket as the industry strengthens its foothold in the country. At the same time, there is a regulatory hurdle that the country still has to cross before putting money in gambling or casino stocks can be considered ‘investment’ in its purest form.
Amid these risks and opportunities, people are bravely backing some companies to become major players in the industry. Some of these stocks are comfortably outperforming the broader market, a trend that is likely to continue in 2025. We therefore decided to look at the stocks that are dominating the sector so far in 2025.
To come up with our list of the 10 hottest gambling stocks of 2025 so far, we only considered stocks with a market cap of at least $100 million that were outperforming the S&P 500.
10. Light & Wonder Inc. (NASDAQ:LNW)
Light & Wonder Inc. is a gaming company that operates through the iGaming, SciPlay, and Gaming segments. The company also serves the casino and gambling industry through products like video lottery terminals, card shufflers, chip sorters, deck checkers, and other gaming equipment. Its stock is up 12.32% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
One of the things that attracts investors to LNW is its strong management. After the company went into debt to finance M&A deals that didn’t turn out well, it was unable to judge the changing consumer preferences in the gambling industry. That all changed with a new management which not only turned the company’s books around but also focused on key segments like social gaming, gaming equipment, and services. All three of these segments showed double-digit growth in the third quarter. It therefore doesn’t come as a surprise that the stock is rallying just before the Q4 earnings scheduled for 25th February.
9. Accel Entertainment (NYSE:ACEL)
Accel Entertainment is a distributed gaming operator in the US and generates revenue by installing, operating, and maintaining gaming terminals. The company also operates gambling equipment in non-casino areas such as restaurants and grocery stores. Its stock is up 14.42% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
The company is just coming off an acquisition spree after spending $40 million to acquire LSM Gaming and Toucan Gaming, two firms that own video poker establishments. The stock has shown considerable volatility since these acquisitions late last year. However, shrewd investors are taking each dip as a buying opportunity considering how undervalued the stock is. It trades at a PE ratio of 14.27, which is less than half the average PE of its industry. The price-to-book ratio of 4.71 is also attractive, again less than half of the industry average PB value of 9.89! As the company starts reaping the rewards of its latest acquisitions, the valuation could unravel unlocking shareholder returns.
8. Flutter Entertainment (NYSE:FLUT)
Flutter Entertainment is a sports betting company operating mainly in Europe and the US. It has four segments that cater to different geographies, namely Australia, International, UK & Ireland, and the US. Some of its products include fantasy sports, sports betting products, online racing betting, and iGaming. Its stock is up 15.62% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
Flutter Entertainment’s FanDuel is competing well with DraftKings. Both companies enjoy a combined market share of 74% and are often neck-to-neck when looked at using this metric. While the domination serves these companies well, it also opens them up to regulatory scrutiny, which is exactly what happened in December when two US senators accused the companies of anti-competitive behavior.
FLUT grew its revenue at an amazing 51% in the third quarter, so excitement surrounding its next month’s earnings is fully justified and so is the stock rally.
7. Gambling.com Group Limited (NASDAQ:GAMB)
Gambling.com Group Limited offers marketing services to the global gambling industry, focused mainly on companies that offer online sports betting and casino facilities. Its stock is up 18.96% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
As the US continues to legalize gambling, companies like GAMB are thriving. It can be considered a ‘Picks & Shovels’ play. It is a company that isn’t directly involved in running the gambling industry and only provides the parts that are critical in moving the industry. This not only saves the regulatory hassle but also means they don’t have to pay licensing fees.
Consequently, GAMB enjoys 90% gross margins as compared to the 50% margins that a typical sportsbook provider can manage. The firm continues to focus on acquisitions, which may decrease its cash pile in the short run but since the acquisitions hit the ground running and started generating revenue, it isn’t a red flag as far as the balance sheet is concerned.
6. Inspired Entertainment (NASDAQ:INSE)
Inspired Entertainment is a global supplier of gaming platforms, content, and services to the betting and gaming industry. The company has four revenue-generating segments: Virtual Sports, Leisure, Interactive, and Gaming. Its stock is up 20.99% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
The company has just announced the release of the 20p Boost Roulette, a part of its line of popular 20p Roulette products. The new product aims to increase player control and excitement by offering features such as Boost Bar and Spin Bar. The potential for bigger wins for players is what could drive more people to use this product, hence bringing in more revenue.
Recently, the company also renewed its partnership with the British motorway service operator Moto Hospitality. As a profitable small cap with a market cap of just under $300 million, the company has the potential for exponential gains in the future.
5. Rush Street Interactive (NYSE:RSI)
Rush Street Interactive operates sports betting and online casinos in the US, Canada, Mexico, and South America. Its real-money online casinos are quite popular among users together with its social gaming services. The stock is up 21.72% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
As more and more states ease up on betting regulations, companies like RSI can increase their footprint and compete with the giants of the industry. Despite competition from bigger rivals like DraftKings and Flutter Entertainment, the company has managed to maintain its market share. Its revenue has grown at an amazing CAGR of over 95% from 2018 till the third quarter of 2024.
On the last earnings report, RSI increased the guidance for 2024 revenue so there is considerable optimism before the 26th February earnings call. One of the things investors are looking at is the company’s growth in Latin America. In Q3 2024, the company reported that its monthly active users in the region grew at 122% YoY. With less than 20% of the company’s revenue coming from Latin America, the growth prospects continue to drive the stock price higher.
4. Codere Online Luxembourg (NASDAQ:CDRO)
Codere Online Luxembourg operates as a sports betting and online casino company under the Greenplay and Codere brands. The company is based in Luxembourg and has operations in multiple European countries as well as Mexico, Panama, and Argentina. Its stock is up 27.91% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
There is considerable excitement leading up to the earnings call scheduled for the 26th of February. At the Q3 earnings call, the management announced a 20% YoY growth with improving margins. As a result, it is expected to meet the upper end of its 2024 guidance. While concerns about the company’s delayed 2023 annual filing and a delisting notice are valid, the market is willing to overlook these concerns expecting the company to resolve them before the deadline.
3. Super Group Limited (NYSE:SGHC)
Super Group Limited is the owner of Spin, an online casino platform, and Betway, an online sports betting brand. Its stock is up 33.71% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
Late last month, the company announced that it expected a record ex-US Q4 revenue, easily surpassing the full-year ex-US guidance. This surge in revenue after the company exited from the US has increased investor confidence in the management. Analysts at Canaccord Genuity upgraded the stock as a result, increasing their price target to $10 from $5. They also raised the fiscal 2025 revenue and profitability estimates confident of the company’s operations in Africa, Canada, and Europe.
SGHC has been paying dividends for the last two quarters and has a forward dividend yield of 1.2%, giving investors the much-needed safety of consistent income provided it can continue sharing future profits with the shareholders.
2. DraftKings Inc. (NASDAQ:DKNG)
DraftKings Inc. is a digital sports entertainment company with global operations. Its producers include fantasy sports, online betting, and digital lottery couriers among others. Its stock is up 43.79% so far this year, outperforming the S&P 500’s 4.19% YTD returns.
The company recently reported its Q4 earnings, registering a staggering 30% YoY growth. The most exciting part of the report was that the firm became free cash flow positive for the first time. It acquired 3.5 million new customers in the quarter, which now takes its total customers count to 10.1 million. A 42% growth in a single quarter is worth something, no wonder the stock is up 43.79% in 2025.
Looking forward to 2025, the company has some exciting plans such as the focus on acquisitions. It plans to improve the live betting experience through acquisitions like Simplebet and Sports IQ Analytics. While such acquisitions will continue to raise competition concerns in the US, that is a risk investors have gotten used to by now. The company’s 2025 guidance points to another stellar year with a 35% revenue growth at the midpoint. The DraftKinds party is only getting started and now that the company is FCF positive, a dividend or stock buyback could send the stock skyrocketing.
1. Bragg Gaming Group Inc. (NASDAQ:BRAG)
Bragg Gaming Group provides technology solutions and exclusive iGaming content to both land-based and online gaming operators. The company’s unique content is loved by consumers and business owners alike. This content is based on data-driven insights from brands like Indigo Magic, Wild Streak Gaming, and Atomic Slot among others. Many sportsbooks and online casinos run on the company’s Player Account Management (PAM) platform.
BRAG stock is up 50% so far this year, outperforming the S&P 500’s 4.19% YTD returns. The staggering results have come as the company projected double-digit revenue growth in 2025. The 2024 revenue is also expected to register a 9% YoY growth. This double-digit growth is well-complemented by expanding margins.
On top of the business performance, management continues to buy stock, a rare occurrence in today’s market where skyrocketing valuations have forced many executives to sell their shares. As the company continues to generate more cash and diversify revenue streams, the future returns could look even more impressive than its YTD returns.
Bragg Gaming Group Inc. is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 4 hedge fund portfolios held BRAG at the end of the third quarter which was 6 in the previous quarter. While we acknowledge the potential of BRAG as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as BRAG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
