This is the point in time where Las Vegas is transformed into something that transcends physical boundaries, and we have the U.S. Supreme Court to thank for opening up a massive sports betting market that—for starters—will probably absorb the $150 billion the American Gambling Association estimates is bet illegally on sports every year in the U.S.
The beneficiaries are big and varied. Everyone from live in-game betting operators, to casinos, sports clubs and betting app makers are set to cash in their chips here.
Some are even speculating that social media giants such as Facebook (FB), Twitter (TWTR) and Google (GOOGL) will be clamoring to enter the sports betting business because they could easily take advantage of their massive user bases and infrastructure.
However crowded this space becomes, all bets are on the house.
In May, the Supreme Court struck down a 1992 federal law that barred states from authorizing sports gambling.
Now, many states are lining up to copy something like the quarter of a billion dollars in sports bets that New Jersey took in just in October, or even better, the $528 million that Nevada took in.
So while casino stocks, for instance, flopped this year, analysts are expecting outsized gains going forward.
As Bernstein’s Vitaly Umansky notes, “the gaming space has shown, time and again, that if investors pick the right market, the right company, at the right time, outsized returns are possible”.
Whether it’s an established casino giant angling for fresh flesh, a sports team that sees the green in partnering with the gambling world, or a savvy small-cap that sneaks in to position itself as an end-to-end provider of next-gen gaming solutions …
Here are 5 stocks that can get you into the game:
#1 MGM Resorts (NYSE:MGM)
The largest casino operator in the United States, MGM pulls in more than $4 billion in revenue just from Las Vegas, but now its angling big for sports betting, surrounding it on all fronts.
In no uncertain terms, these guys are building a sports betting empire that is poised to end up trumping their casino operations, as evidenced by their recent partnership deal with Major League Baseball (MLB), which also features in our Top 5 list. So, MGM will be MLB’s official gaming partner, adding to the resorts company’s sports line-up, which already included pro basketball and hockey.
MGM will leverage this new partnership to cross-promote its casinos and its sports betting app. The only thing missing now is professional football.
Once MGM secures football, it might be the death of Las Vegas as we know it.
Investors will also be keenly watching how MGM’s partnership deal with Boyd Gaming (NYSE:BYD) is leveraged. BYD is one of the biggest sportsbooks operators in Las Vegas, and MGM will now have access to its online and mobile gaming platforms—and vice versa—in some 15 states.
#2 Bragg Gaming Group, Inc. (TSX.V:BRAG.V; OTC:BKDCF)
This little-known company boasts the single largest Facebook page in the online sports industry, with 26 million fans who are sports fanatics. The Bragg Gaming Group is betting that many of them are ready to pounce on a new sports gambling app in the $150-billion market that just opened up.
Bragg is positioning itself as an end-to-end provider of next-generation gaming solutions, transitioning from its traditional tech and AI business. It’s a transformation that’s timed specifically to take advantage of the critical moment for outsized opportunities in the sports betting market.
They plan on dealing in everything from casinos, e-sports and poker to sports betting, lotteries, B2B/B2C gaming technologies and payment services, so Bragg is set to hit the ground running.
Its secret weapon is its GiveMeSport subsidiary, the proud owner of the 26-million-strong Facebook sports information page, which beats even ESPN.
Even better where timing is concerned, they are about to launch their first game to this massive audience...
It’s a new app that they’ve been holding back for years, waiting for sports gambling to be legalized.
The catalysts are mounting: Bragg has recently acquired Oryx Gaming, a turnkey gaming solutions provider for casino operators that include over 5,000 integrated games, including from Tier-1 gaming operators.
That’s when Breaking Data became Bragg (TSX.V:BRAG.V; OTC:BKDCF) and got listed on the TSX Stock Exchange.
Bragg is a highly integrated gaming and media company that leverages its cross product and multi-channel platform to market its diverse product suite. Its sports betting arm will operate under the GiveMeBet banner, working pretty much like Sky Betting and Gaming, which was sold to the Stars Group to April this year for £5.7 billion.
GiveMeBet will funnel GiveMeSport’s 26M users and work to monetize them, starting with sports betting and then moving on to casinos, e-sports, poker, lotteries, B2B/B2C gaming technologies and payment services.
So, Bragg will own three gaming and media assets: GiveMeSport, Oryx Gaming and GiveMeBet—all to be high-value businesses serving high-growth markets.
Both GiveMeSport and Oryx Gaming are proven growth machines. Since April 2017, Give Me Sport’s UK monthly traffic has increased by 5 million and currently exceeds 30M. Revenue has grown by a healthy 30 percent clip.
For investors looking for that sweet under-the-radar bet in a sector that is worth an estimated $150-billion only from formerly illegal sports betters—this is the pure play.
#3 Caesars Entertainment (NYSE:CZR)
Give unto Caesar what is his … and the newly legal sports betting bonanza is likely to do just that. Casino stocks will be one of the biggest beneficiaries of the Supreme Court’s May ruling.
And one of the biggest specific catalysts is Caesar’s positioning of itself to gain access to the wildly lucrative Japanese gaming market, following a Japanese ruling in July allowing Las Vegas-style casinos.
Dubbed the ‘mother lode’ for Las Vegas gaming companies because of the Japanese penchant for gambling, Caesar’s is expected to soar on this. But not only on this: The location means it will automatically have access to other Asian gambling tourists.
Japan is expected to issue its first casino license in 2020 and see its first casino opened in 2025. But the big number of interest to investors is the $21 billion gaming market Japan is expected to be.
Las Vegas gaming executives expect the first casino license to be issued in 2020, with the first resort to be opened by 2025. Osaka, Wakayama and Yokohama are among the cities interested in hosting a casino.
The recent quarterly earnings also helped, with CZR reporting $.0.03 earnings per share, meeting analyst expectations, with $2.19 billion in revenue for the quarter.
Stock is down from highs right now, but a brand new world is opening up to it, and many view it as undervalued:
#4 Madison Square Gardens (NYSE:MSG)
As billionaire Dallas Mavericks owner Mark Cuban told CNBC right after the Supreme Court ruling on sports betting in May, “I think everyone who owns a top-four professional sports team just basically saw the value of their team double.”
The nearly $7-billion market cap MSG, which owns the New York Knicks and the New York Rangers, now appears to be undervalued.
And there are some big catalysts here. Longer-term, investors should be looking at the massive market potential for sports television and streaming rights right now.
But the biggest thing on investor radar presently is progress towards spinning off MSG’s sports business, for which it filed its initial Form 10 on October 4th. The spin-off would mean that investors can better evaluate the company’s assets and future potential, as Forbes points out, giving both companies “increased strategic flexibility to pursue their own distinctive business plan and capital allocation policy”.
In other words, the Knicks and Rangers would be a pure-play sports company. The bottom line here is that once this spin-off is completed, assets that are now undervalued will find their true value.
#5 Penn National Gaming (NASDAQ:PENN)
Overall, it’s been a rollercoaster year for Penn, but the new lease on life for sports betting changes things.
This almost $2.7-billion market cap casino company is placing its biggest bet yet with a $3.1-million gamble that the house will win. The deal is the biggest insider purchase in 15 years. And it’s all about sports betting. Penn is planning to launch sports betting at five Mississippi casinos and its Hollywood Casino.
It also got a boost in mid-November on news that it would acquire Detroit’s Greektown Casino-Hotel’s operations for $300 million from Cleveland Cavaliers owner Dan Gilbert, the founder of Detroit-based Quicken Loans.
That rollercoaster showing this year, plus PENN’s miss on analyst estimates in quarterly reporting end up rendering the stock fairly cheap after working in the new potential of the sports betting segment and the casino company’s ability to grasp this opportunity.
Other companies that can’t be forgotten in the new gaming boom:
GameHost Inc (TSX:GH)
GameHost is a leading entertainment and hospitality provider based in Alberta, Canada. The company operates four primary properties in the Alberta province, each offering slot machines, table games, top quality hospitality and more meant to appeal to both casual gamers and dedicated gamers alike.
GameHost is well-known for providing dividends to its investors, a plus for those who have stuck with the company over the years. In fact, its focus on increasing value for shareholders is made abundantly clear in its mission to reduce costs and improve offerings, creating some of the highest profit margins in the business.
Pollard Banknote Ltd. (TSX:PBL)
Pollard Banknote is one of the world’s largest instant scratch-off lottery suppliers for over 30 years, distributing tickets to over 60 lottery and charitable gaming organizations across the globe. With top-tier marketing, new design developments and other innovative measures, Pollard has solidified its position as one of the greats.
One way that Pollard sets itself apart from the competition is its social media presence. Pollard has worked hard to leverage new media outlets including Facebook and Twitter to really up its marketing game…and its efforts show.
Like other companies in this list, however, Pollard continues to pay its investors healthy dividends, showing where its priorities really lie at the end of the sday.
Jackpot Digital Inc. (TSXV:JP)
Jackpot Digital is at the forefront of the digital gaming revolution, providing cutting-edge tech features, industry breaking mini-games, a wide variety of payment optionas and more. Additionally, Jackpot takes its regulatory responsibility seriously, and is fully compliant with all necessary regulations.
In addition to its online offerings, Jackpot Digital also offers a physical kiosk for casinos around the globe, allowing users to refill their accounts, fund gift cards, register for tournaments, and even allow casinos to add customized marketing displays.
Absolute Software Corporation (TSX:ABT)
This Vancouver-based company offers endpoint security and data risk-management solutions. And it looks like it’s on a path of securing strong new customers. The pipeline looks great, and forecasts have been increased.
With strong management and an innovative team, Absolute Software is drawing investor attention. Absolute is positioned perfectly for the coming fintech revolution, and its security offerings are sure to save its clients time and money moving forward.
Absolute is another company that stands out a bit due to its backdoor potential. Some of the world’s leading industries trust Absolute with their most important security challenges, and nowhere is that task more essential than in the gaming industry, where so much rides on digital platforms.
Versus Systems Inc. (CNE:VS)
Versus, a Vancouver based tech company is not your average game developer, or e-gaming provider.
The company is operating a business-to-business system with which gaming companies and developers can offer in-game purchases and prices to their users.
With their Winfinite platform, the company has found a unique niche, a niche that makes sense if you see that the developer of Fortnite, a popular on-line game, has already earned some $1 billion with in-game purchases.
The company’s 2018 results are impressive, and show much more engagement in terms of time played, and e-mails opened. Going forward, Versus Systems attempts to make the Winfinite system easier to integrate in different games in order to be able to offer more e-commerce solutions real-world prizes, coupons, and offers inside games.
The company has seen a bit of a share price correction in 2018, but the continued growth of e-gaming market continues to offer opportunities for this company.
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FORWARD-LOOKING STATEMENTS. Statements in this communication which are not purely historical are forward-looking statements and include statements regarding beliefs, plans, intent, predictions or other statements of future tense. Forward looking statements in this article include that the gaming industry continues to grow; that a bigger investment opportunity than casinos may be in growth stocks like BRAGG; that GiveMeSport’s new website will start with sports betting before expanding into the other areas including casino games, e-sports, poker and lottery products; that BRAGG Systems may have a system that would be accepted by gamers; that it can leverage the Give Me Sport fan base into sports betting through BRAGG’s platform to drive adoption and growth; that BRAGG can protects its intellectual property; the size of the potential sports gaming market; that Oryx gives it the gaming platform to break into the online sports gaming and betting market: that more states in the US will legalize sports gaming; and that BRAGG’s revenues will continue to increase; and that the company intends to grow and acquire assets across the full spectrum of gaming verticals in multiple jurisdictions. Forward looking statements involve known and unknown risks and uncertainties which may not prove to be accurate. Actual results and outcomes may differ materially from what is expressed or forecasted in these forward-looking statements. Matters that may affect the outcome of these forward looking statements include that markets may not materialize as expected; gaming may not turn out to have as large a market as thought or be as lucrative as thought as a result of competition or other factors; fans who like sport may not be converted to online sports gamblers; BRAGG may not be able to offer a competitive product or scale up as thought because of potential inferior online product, lack of capital, lack of facilities, regulatory compliance requirements or lack of suitable employees or contacts; BRAGG’s intellectual property rights applications may not be granted and even if granted, may not adequately protect BRAGG’ intellectual property rights; and other risks affecting BRAGG in particular and the gaming industry generally. The forward-looking statements in this document are made as of the date hereof and the Company disclaims any intent or obligation to update such forward-looking statements except as required by applicable securities laws.
Risk factors for the online sports gaming industry in general which also affect BRAGG including without limitation the following: Competitors may offer better online gaming products luring away BRAGG’s customers; Technology changes rapidly in the business and if BRAGG fails to anticipate or successfully implement new technologies or adopt new business strategies, technologies or methods, the quality, timeliness and competitiveness of its products and services may suffer; BRAGG may experience security breaches and cyber threats; regulators may impose significant hurdles to online gaming companies; BRAGG’s business could be adversely affected if consumer protection, data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of consumer protection and data privacy laws generally; The products or services BRAGG distributes through its platform may contain defects, which could adversely affect BRAGG’ reputation.
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