We recently compiled a list of the 10 Best Casino Stocks to Buy According to Billionaires. In this article, we are going to take a look at where PENN Entertainment, Inc. (NASDAQ:PENN) stands against the other best casino stocks.
The casino industry has rebounded strongly from the COVID-19 pandemic, due to pent-up demand from gamblers and visitors returning to popular places such as Las Vegas. Brick-and-mortar casinos make a substantial profit from hotel operations, conventions, and other events in addition to the revenues that they make from slot machines and table games. Casino stocks are categorized as consumer discretionary since tourism and gambling spending are strongly correlated with the overall economic condition. According to Market Research Future, the global casino market is projected to grow from $309.54 billion in 2024 to $511.6 billion by 2032, with a compound annual growth rate (CAGR) of 6.48% over the forecast period (2024-2032). Furthermore, in 2023, the casino market was estimated to be worth $290.7 billion.
Regionally, the Asia Pacific Casino market dominates the industry due to the growing availability of online casinos and the average individual’s income. The North American casino market has the second-largest market share due to the legalization of sports betting and the approval of online gambling in the region. Furthermore, the UK casino market grew at the quickest rate in the European region, while the German casino industry held the largest market share.
Macquarie analyst Chad Beynon recently highlighted the significant market reaction to casino industry earnings even though the results were essentially in line with forecasts. After five years of underperformance, the industry saw double-digit stock increases due to improving sentiment, potential interest rate drops, and solid early-year trends. Although Macau’s recovery is still below pre-pandemic levels, gaming revenue is projected to rise by 8% in 2025, outperforming the U.S. market’s flat-to-2% growth. Chinese New Year activity was consistent rather than volatile, showing a healthy demand trend. By bypassing the costs of licensing and regulations, new event-based contracts may pose a threat to established operators. However, Beynon believes that licensed operators will fight back, as they did against sweepstakes and illegal betting. Investor confidence was strengthened by generally favorable remarks regarding recent trends, even if some companies decided not to provide updates during the quarter. The industry is now seen more favorably by analysts after years of weak performance.
Apart from analysts, there are also billionaire investors who remain bullish on the casino stocks. Ken Fisher’s Fisher Asset Management, with a portfolio worth more than $252 billion, has invested in two renowned casino stocks. In Q4 of 2024, Fisher invested more than $201 million and owned more than 2.3 million shares in a high-end casino and hotel operator in the United States. Fisher’s confidence in the market’s long-term potential is proven by the fact that the stock makes up 0.07% of his portfolio. In the same quarter, Fisher also made an investment of more than $153 million in an American multinational hospitality, sports, and entertainment company.
Meanwhile, in Q4 of 2024, Billionaire Carl Icahn’s Icahn Capital LP, which has a $7.4 billion portfolio, showed its trust in the industry by investing over $82 million in the largest casino-entertainment firm in the United States.
The bright and neon lights of a glitzy casino, revealing the company’s iCasino and gaming properties.
Our Methodology
For this article, we scanned Insider Monkey’s Q4 2024 proprietary database of billionaires’ stock holdings and identified casino stocks from the list. These companies are involved in operating casinos, online gaming platforms, sports betting, and resort entertainment. From there, we picked the top 10 stocks with the highest number of billionaires having a stake in them. Where two or more stocks were tied on billionaire sentiment, we used the dollar value of billionaire holdings as a tiebreaker between them.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
PENN Entertainment, Inc. (NASDAQ:PENN)
Number of Billionaires: 10
Billionaire Holdings: 238,479,703
PENN Entertainment, Inc. (NASDAQ:PENN) is the owner of racetracks, online casinos, and regional casinos. It has a strong omnichannel presence, with 43 physical casino and racing properties, a digital portfolio that includes media, iGaming, a loyalty membership base of over 30 million, and a fresh sports betting deal with ESPN that began in November 2023. Analysts estimate the firm held around a high-single-digit percentage revenue share of the $72 billion domestic commercial casino gaming market in 2024. Early in the pandemic, its stock soared as investors were captivated by its moves into online gambling.
PENN Entertainment, Inc. (NASDAQ:PENN)’s revenue growth in 2024 was led by strong property-level performance, with locations that were untouched by new competition growing by roughly 3% YoY. Significant improvements were also made by the company in its Interactive area, where strict advertising tactics and strong online casino operations resulted in higher revenue and Adjusted EBITDA.
Digital market share was boosted by the Hollywood iCasino app’s successful launch in Pennsylvania and Michigan, and engagement continued to rise with the growth of the digital membership base to over four million individuals. The Score and Score BET also kept up their strong performance in Canada, especially in Ontario, and they have ambitions to enter Alberta, which will support their growth. Despite difficulties in the sports betting market, these factors, along with smart operational efficiencies, let PENN Entertainment, Inc. (NASDAQ:PENN) maintain a high performance.
Four retail expansion projects are being built with the goal of producing high returns, and they are anticipated to open between late 2024 and mid-2026.
Overall, PENN ranks 8th on our list of the Best Casino Stocks to Buy According to Billionaires. While we acknowledge the potential for PENN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PENN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
