We recently published a list of 10 Largest Gambling Stocks of 2024. In this article, we are going to take a look at where Wynn Resorts, Limited (NASDAQ:WYNN) 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).
Wynn Resorts, Limited (NASDAQ:WYNN)
Market Capitalization: $10.63 Billion
No. of Hedge Fund Investors: 42
Wynn Resorts, Limited (NASDAQ:WYNN) is one of the biggest casino operators and has a strong presence in Las Vegas and Macau. Wynn Macau oversees the operations in Macau and is a subsidiary of Wynn Resorts, Limited (NASDAQ:WYNN) listed on the Hong Kong exchange. The company has high-end luxury hotels worldwide.
Wynn Resorts, Limited (NASDAQ:WYNN) has obtained its first commercial gaming operator’s license in the UAE. Wynn Resorts is building a luxury resort at Wynn Al Marjan Island in Ras Al Khaimah in a joint venture with Marjan and RAK Hospitality Holding. This is a big development for the casino operator to build its first resort in a financial hub, where the millionaire population continues to grow.
Wynn Resorts, Limited (NASDAQ:WYNN) is a solid casino firm with worldwide assets. Wynn Macau’s long-term outlook remains very bright. The company is enhancing its product offering in Macau through new and innovative food and beverage concepts and unique programs. Furthermore, Wynn Macau is working on its second major concession-related project, the destination food hall, which is expected to open in 2025. Wynn Resorts, Limited is also exploring greenfield opportunities in major gateway cities like New York and Bangkok.
As Wynn Resorts, Limited (NASDAQ:WYNN) penetrates major global markets, analysts are bullish as well. Susquehanna analyst Joseph Stauff raised his price target on WYNN to $122 from $92 and kept a Positive rating on the shares. The analyst also raised his 2025 estimates for Wynn Resorts and expects a higher Macau-based EBITDA multiple of 14x compared to the previous estimate of 12x.
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 7th on our list of largest gambling companies in 2024. 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 an AI stock that is more promising than WYNN 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.
