We recently published a list of 10 Largest Gambling Stocks of 2024. In this article, we are going to take a look at where Churchill Downs Incorporated (NASDAQ:CHDN) 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).
Churchill Downs Incorporated (NASDAQ:CHDN)
Market Capitalization: $10.19 Billion
No. of Hedge Fund Investors: 31
Churchill Downs Incorporated (NASDAQ:CHDN) remains one of the favourite gambling stocks of hedge funds. The company is known for its diverse portfolio of racetracks, casinos, and online betting. CHDN is operating in an evolving market with the potential for notable growth. The company is famous for its flagship event, the Kentucky Derby. In addition to that, the company also operates an online horse racing wagering platform in the U.S.
On October 23, Churchill Downs Incorporated (NASDAQ: CHDN) announced the third quarter 2024 results, with record Q3 revenue of $628.5 million compared to $572.5 million a year ago. The revenue was mainly driven by the company’s Live and Historical Racing and Gaming segments. In addition to record Q3 revenue, CHDN also posted historical net income of $65.4 million, up from $61 million in Q3 2023.
The company opened The Rose Gaming Resort in Dumfries, Virginia, with 1,650 historical racing machines and a 102-room hotel. Churchill Downs Incorporated has also announced the development of a $40 to $50 million historical racing machine (HRM) entertainment venue in Calvert City, Kentucky. The new HRM venue will be a 23,000-square-foot facility with 250 HRMs, a sports bar and a sportsbook, and a simulcast center, expected to open in early 2026.
With continued growth, the company has also announced a dividend of $0.409 per share, payable to shareholders on January 3, 2025. This represents the fourteenth consecutive year of increased dividends. Furthermore, Churchill Downs Incorporated (NASDAQ:CHDN) repurchased 67,139 shares during Q3 at a total cost of $9 million, with a remaining $170.9 million of repurchase authority under the share repurchase program.
Overall, CHDN ranks 8th on our list of largest gambling companies in 2024. While we acknowledge the potential of CHDN 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 CHDN 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.
