Are Gambling Stocks a Sound Investment?

There are many gambling companies big and small that prefer to keep their matters private. There are many of them, like the owners of Spin Casino, that, despite running a large number of properties and operating in many jurisdictions, prefer to stay private. This is not something reserved to smaller groups either – major players (sic!) like Bet365 and Ladbrokes Coral, both from the UK, are privately held despite their significant market share and (probably) hefty profits. There are, in turn, many gambling businesses that went public – both land-based operators and online gambling businesses. Their shares are often seen as “sinful” stocks due to the ethical and moral concerns attached to their industry. But let’s set morals aside for a while and take a look at their financial aspect alone: are gambling stocks a good investment?

The American gambling market is growing

The United States has several major gambling companies – it has software and solutions providers like International Game Technology (NYSE:IGT), resorts and casino operators like Caesars Entertainment (NASDAQ:CZR), Marriott International (NASDAQ:MAR) or the Las Vegas Sands Corporation (NYSE:LVS). Many of these companies operate across several states – and many of them are now exploring the possibility of expanding their activities toward the growing American sports betting industry. Since this industry is just getting started after decades of prohibition, so there is a lot of growth to be expected in this area – especially with the expected growth of online betting now that it has been legalized in the country.

Betting online is in for a boom

According to the estimates of Juniper Research, the global online gambling market will surpass $1 trillion by the year 2022, growing from around $800 billion in 2018. Online casinos are expected to grow by around 40% in this time period thanks to new markets opening up to the industry (several US states have already legalized this lucrative business, with many others considering to do the same in the coming years), seeing its user base almost double in the coming years.

The companies providing equipment and support for the casino industry are also in for serious growth. IGT is one of the biggest such companies in the US, manufacturing everything from slot machines to be placed in casinos to video lottery terminals that can be placed everywhere from pubs to gas stations, depending on the applicable laws in different territories. IGT has a market cap of $3.4 billion, and will likely grow in the coming years as sports betting becomes legal in more states across the United States.

Considering the growth the gambling industry is expected to see across the US and around the world in the coming years, gambling stocks, although for some they may seem questionable from an ethical point of view, will be a sound investment in the long run.