We recently compiled a list of the 11 Best Las Vegas Stocks To Buy Now. In this article, we are going to take a look at where Wynn Resorts, Limited (NASDAQ:WYNN) stands among the best Las Vegas stocks to buy now.
The gambling industry is growing throughout the globe, with the United States being one of the fastest-growing markets. According to the American Gaming Association, more American adults participated in some kind of gambling entertainment activities than ever during the past 12 months. The survey found that more than 55% of American adults participated in gambling, with 28% going to a physical casino while 21% placed sports bets.
One of the key findings of the report was regarding gambling becoming more acceptable within the American population. As per the association, 9 out of 10 adults found casino gambling acceptable for themselves and others as well. This is good news for the US economy and casino companies as they will generate substantial revenues from increased acceptability of gambling. The United States commercial gaming revenue increased 8.9% year-over-year to reach $17.63 billion during the quarter. Q2 2024, marked 14th consecutive quarter of growth and was driven by casino expansion in various states of the country, including Illinois, Virginia, and Nebraska.
Sports betting is one of the major contributors to the overall gambling industry. Let’s take a look at some of the recent trends in the sports betting industry.
What’s Happening in the Sports Betting Industry
It’s hard to think about sports without sports betting or gambling. The sports betting and gambling industry in the United States has exploded in the past 6 years since it became legalized in most states across the United States. Currently, 38 states have legalized gambling and the industry generated more than $120 billion in total bets and $11 billion in revenues for 2023 alone.
In one of the recent episodes of CNBC Boardroom’s Game Plan Sports Event, the executives of FanDuel, Fanatics, and Sportradar discussed the new state taxes and betting industry trends. All the executive members on the panel found that betters are more interested in placing wagers on individual players, along with placing real-time bets during the live sports event.
Moreover, the CEO of FanDuel overturned his decision to charge a gaming supertax from its customers after his competitors decided against charging any such tax. This came in a reaction after two US lawmakers introduced a bill to address sports betting at the federal level. In one of our recent articles on 10 Best Casino Stocks To Buy According to Analysts, we discussed how the upcoming taxes are expected to affect the market. Here’s an excerpt from the piece:
Illinois lawmakers are drafting a new budget that includes a sharp increase to the state tax on sports betting operators. On May 28, CNBC’s reporter Contessa Brewer mentioned that operators in Illinois have paid 15% on sports betting since it went live in June 2021. The new tax proposal is expected to increase the tax to a range of 20% to 40% depending on gross receipts, which means that the largest betting operators are expected to be attacked the highest with this increase.
The law is yet to be passed, but if it gets approved it will make Illinois’ highest tax rate the second highest behind New York and New Hampshire. For context, Illinois is the 4th largest state for sports betting and betters wagered more than $1.2 billion in March 2024 alone. Sports betting associations are not happy with the tax proposal. The CEO of one of the largest sports betting operators in the United States mentioned that the burden of this tax is going to shift to the consumers.
There is an upcoming tailwind which is expected to boost the industry further. The football season is back and the NFL is expected to spur a record $35 billion in legal sports betting. On September 3, CNBC reported that the United States will wage $35 billion this NFL season, marking a 30% increase since last year’s National Football League.
Much has changed since the last season. During the year states including Maine, North Carolina, and Vermont have allowed sports betting operations in their jurisdictions. Amidst the upcoming season, sports betting companies are feeling the heated competition and platforms are coming up with new strategies to capture more customers.
The president of FanDuel mentioned that the NFL season is one of the biggest acquisition periods of the year. The platform has partnered with YouTube and rolled out a “Sunday Ticket” offer, where players who bet at least $5 get a 3-week trial period to watch the NFL matches with Sunday Ticket. Moreover, as more than 95% of sports betting is happening online it presents an exciting opportunity for sports betting leaders to enhance their customer base and generate more revenues.
Our Methodology
To compile the list of 11 best Las Vegas Stocks to buy now we used the Finviz screener and ETFs. Using these two sources we first curated a list of 20 casino, gambling, and gaming stocks. Once we had the list, we then ranked these stocks based on the number of hedge funds holders during the second quarter. The list is ranked in ascending order of the number of hedge funds.
Why do we care about what hedge funds do? 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).
A wide shot of a casino in night light, picturing the high stakes of iGaming and sports betting.
Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 42
Wynn Resorts, Limited (NASDAQ:WYNN) operates luxury hotels and entertainment casinos. While the company has a significant presence in Las Vegas and Boston, its Macau operations are the ones driving significant revenues for the company.
Its famous hotels include the Wynn Palace which offers 14 food and beverage outlets, 107,000 square feet of retail space, and various gaming and entertainment facilities. Wynn Resorts, Limited (NASDAQ:WYNN) reported a record second-quarter Adjusted Property EBITDAR of $572 million indicating that it has finally gained back its lost momentum during the pandemic. The EBITDAR was up almost 9% year-over-year on the back of strong performance across all properties.
Macau operations witnessed significant improvement. Operating revenues from Wynn Palace increased by $79.7 million as compared to the second quarter of last year. Whereas, the operating revenues from Wynn Macau improved by $35.7 million during the same time.
While the investors are still praising the company for its comeback in Macau, management is eyeing the UAE market as well. Wynn Resorts, Limited (NASDAQ:WYNN) continues to focus on growth and is constructing Wynn Al Marjan Island in the UAE at a rapid speed. It plans to develop a resort with more than 1,500 rooms in the UAE, similar to the size of Encore Boston Harbor, which delivered operating revenue of $212.6 million for the second quarter of 2024.
Wynn Resorts, Limited (NASDAQ:WYNN) is one of the best Las Vegas stocks to buy now. It was held by 42 hedge funds in Q2 2024, with total positions worth $1.02 billion. Alkeon Capital Management was the company’s leading stakeholder in Q2, with a position worth $$259.5 million.
Baron Real Estate Fund featured stocks such as Wynn Resorts, Limited (NASDAQ:WYNN) in the fourth quarter 2023 investor letter. Headquartered in Las Vegas, Nevada, Wynn Resorts, Limited (NASDAQ:WYNN) designs, develops and operates destination casino resorts. On January 22, 2024, Wynn Resorts, Limited (NASDAQ:WYNN) stock closed at $92.07 per share. One-month return of Wynn Resorts, Limited (NASDAQ:WYNN) was 1.82%, and its shares lost 8.20% of their value over the last 52 weeks. Wynn Resorts, Limited (NASDAQ:WYNN) has a market capitalization of $10.399 billion.
Baron Real Estate Fund stated the following regarding Wynn Resorts, Limited (NASDAQ:WYNN) in its fourth quarter 2023 investor letter:
“The shares of Wynn Resorts, Limited (NASDAQ:WYNN), an owner and operator of hotels and casino resorts, declined modestly in the most recent quarter, in part due to concerns about economic weakness in China.
We remain optimistic about the multi-year prospects for the company. We believe the ongoing re-emergence of business activity in Macau will drive additional shareholder value. If cash flow returns to the level achieved in 2019 prior to COVID-19, we believe Wynn’s shares will increase 30% to 50% higher than where they have recently traded.
We believe additional drivers for future value creation beyond a re-emergence in Macau business activity include: (i) our expectation for long-term growth opportunities in the company’s U.S.-centric markets of Las Vegas and Boston, including an expansion of Wynn’s Encore Boston Harbor resort; (ii) Wynn’s plans to develop an integrated resort in the United Arab Emirates with 1,500 hotel rooms and a casino that is similar in size to that of Encore Boston Harbor; (iii) opportunities to improve cash-flow margins by rightsizing labor and achieving lower staff costs in Macau; (iv) the possibility that Wynn is granted a New York casino license; and (v) an expansion in the company’s valuation multiple to levels achieved prior to the pandemic.”
Overall WYNN ranks 5th on our list of the best Las Vegas stocks to buy now. While we acknowledge the potential of WYNN 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 a promising AI stock 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 on Insider Monkey.
