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The COVID-19 pandemic has caused severe damage to many industries around the world, and the gambling industry has also been affected. Land-based casinos have been forced to close their doors to visitors due to current restrictions. However, the closure of land-based casinos positively impacted the development of online gambling.
The Current State of The Gambling Entertainment Market
The number of gamblers did not decrease, and they began to look for a way out of this situation. This solution was an online casino—an extensive list of games, excellent bonuses, and live mode. The most important plus is that to access all the features, you don’t even need to leave your home; it’s enough to have a phone or computer connected to the internet with you.
Despite the adverse effects of COVID-19, the gambling industry continued to develop and expand. Experts call the legalization of the gambling business a catalyst for growth—each major USA website receives a license and can work on a legal basis.
According to Goldman Sachs estimates, the sports betting market will reach $37 million by 2023. Further growth of average annual indicators by an average of 40% is expected.
Penn Entertainment Inc. (Nasdaq: Penn)
Number of hedge fund holders: 30
PENN Entertainment develops integrated entertainment, sports content, and casino games. The company’s products are in demand mainly in North America. For better delegation of tasks in the United States, several business units have been opened at once—Northeast, South, West, etc.
In 2022, the company was rebranded; the new name reflects that the company has expanded the list of services provided to sports content and other entertainment. On November 3, 2022, the target price for gaming shares of PENN Entertainment, Inc. was reduced to $54. This happened against the background of the fact that the company’s losses in the third quarter turned out to be more significant than expected.
The decrease in the target price of the shares did not affect the hedge funds in any way; they are still optimistic about the company.
At the end of the third quarter, 30 hedge funds from the Insider Monkey database were bullish on the company. Despite the slowdown in growth, the company’s profit is still high. The company’s last good decision was to invest in digital growth opportunities.
Currently, the company is well positioned to survive even the slowdown and other challenges. Revenue figures remain at the level even before the pandemic started.
Now PENN Entertainment is actively expanding its client base. In the future, this will reduce marketing costs. Retaining existing customers is cheaper for a company than acquiring new ones.
Gaming And Leisure Properties, Inc. (NASDAQ: GLPI)
Number of hedge fund holders: 22
Gaming and Leisure Properties, Inc. is a Wyomissing-based company specializing in acquiring, financing, and owning real estate. All owned properties are then leased to gambling operators. At the moment, the company owns more than 51 such objects.
In the third quarter of 2022, Gaming and Leisure Properties had total revenue of $333.8 million. Compared to the same period in 2021, revenue growth averaged 11.8%.
The large Quad Cities and Black Hawk properties were also leased out during the third quarter. The deal’s closing resulted in a nearly $3 million increase in rental income.
Gaming and Leisure Properties, Inc is actively growing and developing due to a well-provided dividend yield. Even in a recessive economy, income indicators show steady growth.
Draftkings Inc. (NASDAQ: DKNG)
Number of hedge fund holders: 34
The core business of DraftKings Inc. is associated with betting on virtual sports. The company provides its services in 17 countries.
The rapid growth of the company’s revenue came in 2021. At this time, DraftKings Inc. launched its trading platform where it was possible to purchase non-fungible NFT tokens.
According to the results of the 3rd quarter of 2022, DraftKings Inc. supports 34 hedge funds. All of them are optimistic about the company and expect further success in the market.
Now, sports betting, and online games are actively spreading throughout the United States. At the same time, investors are concerned about increased market competition and margins. In order to attract customers, many companies are forced to spend large amounts of money on marketing, which is reflected in the bottom line.
A Few Final Points
If you are interested in gaming promotions, it is advisable to pay attention to the sector related to online entertainment. Even in the face of a pandemic and an unstable economy, companies from this sector continued to show stable growth in profit indicators.
When choosing a specific company for investment, evaluate by multipliers. The main mistake of novice investors is to make an assessment based on quotes. Pay attention to the state in which the company is now—it is actively developing or is in slowdown and stagnation.
Another nuance is that it is better to invest in those areas that you are really interested in. Do not take shares of companies that do not understand what they are doing.
