Casino stocks to consider in 2024

A night at a casino may seem like an experience frozen in time – imagine visions of James Bond or trying your luck at a craps table – but a casino… The industry is changing rapidly and new developments present unique opportunities for investors.

Many US states have legalized online gaming, and both established casino chains and upstart online gambling stocks are jumping on board with this trend. Meanwhile, the Asian market, centered around the Chinese territory of Macau, claims to be the world's largest gambling market, offering huge winnings to operators who own one of the few licenses operating on the island.

After being hit hard by the coronavirus pandemic, the industry has made a spectacular comeback as pent-up demand has seen gamblers and tourists return en masse to destinations like Las Vegas. After all, brick-and-mortar casinos don't just make money on table games and slots. Like other leisure and hospitality stocks, the company operates like a hotel, relying on room occupancy as well as conventions and other gatherings for a significant portion of its revenue. Casino stocks are considered consumer discretionary stocks because spending on gambling and tourism is highly correlated with the overall health of the economy.

If you're looking for the best casino stocks, keep reading to see six of the most attractive gambling stocks you can buy today.

Top Casino Stocks of 2024

Top Casino Stocks of 2024

1. MGM Resorts

1. MGM Resorts

MGM has one of the most impressive collections of real estate in the casino industry. The company owns many of the Las Vegas Strip's most famous casino resorts, including the Bellagio, MGM Grand, Luxor and New York New York, as well as Atlantic City, Detroit and Mississippi. He also owns 56% of the shares in his two casinos in Macau, MGM Macau and MGM Cotai.

About two-thirds of its 45,000 rooms are located along the Strip, making it more exposed to Las Vegas tourists than many other hotels.

MGM's stock price plunged when the pandemic first hit in March 2020, but has since rebounded to post-financial crisis highs. IAC/Interactive (IAC 0.96%) and a pivot to online gaming with BetMGM. In 2021, the company launched online betting in multiple states and opened sportsbooks in several locations. The company reported record EBITDAR for Las Vegas Strip and regional real estate in 2022. However, results in China were hurt by coronavirus-related casino closures for most of the year.

Still, MGM secured its future in gaming with a new 10-year gaming license in Macau.

2. Las Vegas Sands

2. Las Vegas Sands

If you want to bet in Macau, Las Vegas Sands is the place to go. The company is completely focused on the Asian market and operates five casinos in Macau and Marina Bay Sands in Singapore. The company sold its Las Vegas operations, including the Venetian, to a private equity firm in March 2021 for $6.25 billion.

Unfortunately, the strategy to focus on Asia backfired during the COVID-19 pandemic, as strict lockdowns in China and other parts of Asia caused traffic to Macau to plummet. In 2022, the company struggled with regulations and posted an operating loss for the third consecutive year.

Nevertheless, as the region emerges and regulations begin to ease, that business should return, given Macau's large population and cultural affinity for games from China and other parts of Asia. It should continue to be the world's largest game market. The company has also seen a strong recovery at its Marina Bay Sands resort in Singapore.

Las Vegas Sands was slow to enter online gaming due to its focus on international markets, but in July 2021 it announced plans to become a strategic investor in digital gaming technology. However, the effort appears to have fallen apart after its leaders, Davis Catlin and David Williams, left to start their own gambling investment companies.

3. Wynn Resorts

3. Wynn Resorts

Wynn is also a diversified casino operator and owns 72% of Macau's Wynn Palace and Wynn Macau. In addition, we wholly own Wynn and Encore in Las Vegas, as well as Encore Boston Harbor, which opened in 2019.

The company also launched Win Interactive in October 2020, in which it owns a 97% stake, partnering with BetBull, which it later acquired, to launch an online sportsbook and online casino. Wynn nearly sold Wynn Interactive to a SPAC in 2021, but pulled out of the deal in November 2021. Media reports in January 2022 indicated that the company was once again looking for a buyer. Former CEO Matt Maddox said the economics for online sports betting were unfavorable because competitors were spending too much on customer acquisition costs. The company lost $98.5 million in adjusted real estate EBITDAR at Wynn Interactive in 2022, after losing $267.4 million in 2021.

Wynn has not fully recovered from the coronavirus pandemic. The company posted adjusted net losses in 2021 and 2022 due to difficulties with Macau and Win Interactive, and faces significant interest expense on its $12 billion debt.

However, the company continues to aim to develop large-scale luxury properties, and recently announced plans to build a resort near Dubai in 2026. Wynn's focus on underserved markets such as Dubai and the Boston area could pay off for investors in the future.

4. Pen Entertainment

4. Pen Entertainment

PENN Entertainment stock soared early in the pandemic as investors were impressed by the company's move into online gambling. But the stock has cooled since then as the online gambling boom waned, and Penn has given up virtually all of its pandemic-era profits.

The company owns 44 properties in 20 states, but this stock is primarily related to online gambling. Penn Interactive operates as an online sportsbook and casino. The company also owns a 36% stake in his Barstool Sports, and he has entered into a strategic partnership with Barstool to exclusively promote its sportsbooks, including Barstool Sportsbook.

The company followed up its deal with Barstool with the acquisition of theScore, another digital media and gaming platform, for $2.1 billion, further strengthening its position in online gaming.

Despite headwinds for casino properties due to the pandemic, the company posted solid growth from 2020 to 2021 and, unlike many of its peers, was profitable on a GAAP basis. Profits declined in 2022 due in part to higher lease costs, but if the company can generate significant profits from online sports betting, it looks well-positioned to be a winner.

5. DraftKings

5. DraftKings

DraftKings, which went public through a SPAC in 2020, is the only pure online gambling company on this list. It has something of a duopoly with FanDuel in online sports betting, with 27% of the market behind FanDuel's 47%.

Like many of its peers, DraftKings has used acquisitions to grow. In August 2021, the company spent $1.5 billion to acquire Golden Nugget Online Gaming, strengthening its position in online casino gaming and expanding its reach beyond sports betting and daily fantasy sports.

Social distancing and stay-at-home orders during the coronavirus disease (COVID-19) pandemic have led to a boom in online sports betting and gambling, and DraftKings' revenue has been offset by the end of the coronavirus pandemic. It has continued to increase significantly since then. In 2022, his revenue increased by 73% to $2.24 billion, but he still had a loss of $1.5 billion because he continues to spend heavily on marketing.

The company reached 2.6 million monthly paid users at the end of 2022. It's still not hugely profitable, but if you're looking for growth in the casino industry, you can't beat the potential of DraftKings.

6. Caesars Entertainment

6. Caesars Entertainment

Caesars Entertainment was acquired by Eldorado Resorts in 2020, and the Caesars name remained after the acquisition. After the merger, Caesars became the largest casino operator in the United States with his 54 properties around the world, including his eight on the Las Vegas Strip. Caesars operates casinos in 16 states.

Eldorado was a top casino stock even before the merger, and the company, now known as Caesars, has returned about 1,700% since its 2014 initial public offering, thanks in part to Eldorado's aggressive acquisition strategy. . In April 2021, the company invested $4 billion to acquire British online gaming company William Hill Group.

Although the company has made strides in online gaming, the bulk of its business still comes from Las Vegas and local casinos. Like other casino chains, Caesars seeks to leverage its national network through its loyalty program and encourage visits to multiple properties.

With a strong push into online gaming, a well-regarded sportsbook, and a balanced casino business between Las Vegas and regional locations, Caesars is well positioned for future growth, especially if it wants to avoid disruption in Macau. Looks like you're in position.

Related investment topics

Should you buy casino stocks?

Should you buy casino stocks?

As a sector, casino stocks have underperformed the market over the past decade, but there have been some big winners, including Caesars and online gaming stocks like DraftKings and Penn National.

The next decade is likely to be very different from the past one, with the expansion of online gambling in the United States, as traffic to brick-and-mortar casinos surges as post-pandemic reopenings, and traditional gambling It shows that this is not the case. I'm going away. Although there is still a lot of uncertainty ahead for the industry, risk-tolerant investors may find that the casino industry offers great rewards.