We recently published a list of 10 Largest Gambling Stocks of 2024. In this article, we are going to take a look at where Light & Wonder, Inc. (NASDAQ:LNW) stands against the other largest gambling stocks.
According to The Business Research Company, the global gambling market is expected to grow from $540.3 billion in 2023 to $744.8 billion in 2028, at a compound annual growth rate (CAGR) of 6.6%. Some major catalysts influencing the gambling industry include the legalization of gambling, rapid urbanization, increasing use of social media, and increasing involvement in sports betting applications. Factors that can hurt the growth are growing taxation on casinos and strict government oversight of the gambling industry.
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Two of the Leading Markets in the Gambling Industry
The gambling industry is evolving with more and more companies advancing in the sports betting arena. By the end of 2023, the gambling and casino industry had started showing signs of growth as strong gambling activity was experienced in Macau. According to the Statistics and Census Service, the tourist count crossed 28 million in Macau in 2023, increasing by 394.9% from 2022. In the U.S., Las Vegas continues to evolve and remain the largest gambling city in the country. According to Condé Nast Traveler, Las Vegas was the sixth most visited city for international visitors to the U.S. in 2023.
According to the hospitality consulting firm HVS, the Las Vegas Casino and Hotel Market hosted nearly 40.8 million visitors in 2023, surpassing the 40 million threshold for the first time since 2019. Between 2015 and 2019, over 42 million visitors traveled to Las Vegas each year before dropping to just over 19 million in 2020 due to the COVID-19 pandemic.
The deep effects of the pandemic are far behind now and tourism is back to normal in Las Vegas. In 2023, the gaming revenue for Clark County was around $13.5 billion, setting a market record for the second straight year. With new avenues and casino hotels, the gambling market is expected to continue its growth momentum.
Americans’ Support for Gambling
The majority of U.S. adults support casino gambling and sports betting. According to the American Gaming Association Survey, over 55% of U.S. citizens participated in some form of gambling in 2023, while more than 28% gambled at a physical casino. In addition, nearly 21% of people took part in sports betting. With increasing acceptance of gambling, 9-in-10 Americans find casino gambling to be acceptable for themselves or others. The gambling confidence among Americans is higher than ever before. Nearly 65% of Americans believe that the gambling industry is committed to supporting responsible gambling and overcoming problem gambling.
The gambling industry continues to thrive and the bullish sentiment remains strong among the investors. Over the 1 year, three of the largest gambling and sports betting ETFs have gained an average of over 27%, as of November 4. Roundhill Sports Betting & iGaming ETF (NYSEARCA:BETZ), Global X Video Games & Esports ETF (NASDAQGM:HERO), and VanEck Video Gaming and eSports ETF (NASDAQGM: ESPO) have soared over 16%, 24%, and 41%, respectively.
Our Methodology
To compile our list of the largest gambling stocks, we simply made a list of the ten most valuable gambling firms in terms of market capitalization that are traded on U.S. stock exchanges, as of November 4. We also mentioned the number of hedge funds that had invested in the stocks during Q2 2024, and the data for hedge fund investors was obtained from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? 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).
Light & Wonder, Inc. (NASDAQ:LNW)
Market Capitalization: $8.41 Billion
No. of Hedge Fund Investors: 27
Light & Wonder, Inc. (NASDAQ:LNW) is a cross-platform global games company with a focus on content and digital markets. The company segments include Gaming, SciPlay, and iGaming. Light & Wonder offers its gaming products and services to commercial casinos, Native American casinos, and wide-area gaming operators such as licensed betting offices (LBOs) and bingo operators in the UK and Europe.
Light & Wonder, Inc. (NASDAQ:LNW) is facing a legal battle following a recent court ruling that questioned the legality of its popular Dragon Train slot machines. The Nevada judge’s injunction to Aristocrat over the Dragon Train game has hit the stock as the shares have dropped nearly 19% since the news broke out on September 23. Light & Wonder’s CEO Matt Wilson is optimistic, reaffirming the $1.4 billion AEBITDA target for 2025. The management believes that the impact of Dragon Train will be mitigated with hits like ULTIMATE FIRE LINK, backed by the company’s strong game franchises including Dancing Drums, Journey to Planet Moolah, and Monsters, providing a solid foundation for the company’s gaming fleet.
To put this in perspective, for 16 consecutive quarters the company has grown its North American premium installed base and now is at nearly 50% of its total North American installed base.
Light & Wonder, Inc. (NASDAQ:LNW) completed its first-ever share repurchase program in just a little over two years. The company has authorized a new three-year $1 billion buyback program as it continues to experience valuation improvement. On October 15, Light & Wonder, Inc. announced new systems deals with three properties including Casino Miami in Miami, Delaware Park Casino in Wilmington, and Viejas Casino & Resort in San Diego. At G2E earlier this month, Light & Wonder demonstrated its scroll-stopping social media campaigns that are driving real results. In 2024, Light & Wonder experienced a 75% increase in engagement across all social media platforms.
Overall, LNW ranks 10th on our list of largest gambling companies in 2024. While we acknowledge the potential of LNW as an investment, 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 an AI stock that is more promising than LNW 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 is originally published at Insider Monkey.
