Initially, the coronavirus pandemic sparked fear and uncertainty, with various agencies scrambling to address the mysterious threat. But over the ensuing months turned years, people became acclimated to the new normal. Additionally, the early lockdown and mitigation protocols gave plenty of folks extra time to which they normally wouldn’t be accustomed. That transitioned to speculation, boding well for gambling stocks.
A common phrase in western societies is that idle hands are the devil’s workshop. In some ways, this aphorism rang true throughout the Covid-19 pandemic. According to a Los Angeles Times article last month, gambling hotlines saw a dramatic increase in calls throughout these choppy waters. While the normal response would be empathy toward a branch of mental health problems, the reality is that gambling stocks are part of our new paradigm.
Essentially, with real estate and other key consumer product prices soaring through the roof, it’s no longer feasible for regular folks to get ahead unless they dial up the speculation. One of the phrases that you’ll come across is that inflation is a tax on savings. While this is true, it’s also a tax on your income because your employer is not going to automatically pay you more money. That’s where gambling stocks comes in.
Usually, vice-industry-related investments carry a certain stigma which may put off some prospective buyers. But when it comes to gambling stocks, I don’t view it as, say peddling narcotics to kids, or something reprehensible. Rather, I view the sector as a necessity. With the wealth gap widening, people feel like they have no choice: it’s either speculate like crazy or be guaranteed to be an indentured servant to the coming American fiefdom.
Indeed, everyday folks have gotten the message. Under this context, it’s no surprise that the concept of meme trades blossomed or that stock trading on margin has hit all-time highs since records were kept. Therefore, you shouldn’t feel any remorse about considering these gambling stocks to buy.
Although speculative sentiment across a wide variety of platforms flourished into the end of 2021, the early days of the new year suggest a fresh wrinkle in the narrative due to the Federal Reserve’s signaled hawkish policy. As with any investment category, conduct careful due diligence before proceeding with these gambling stocks.
- DraftKings (NASDAQ:DKNG)
- Caesars Entertainment (NASDAQ:CZR)
- Flutter Entertainment (OTCMKTS:PDYPF)
- Penn National Gaming (NASDAQ:PENN)
- Wynn Resorts (NASDAQ:WYNN)
- Melco Resorts & Entertainment (NASDAQ:MLCO)
- Lottery.com (NASDAQ:LTRY)
Gambling Stocks to Buy: DraftKings (DKNG)
Simultaneously among the most celebrated gambling stocks and initial public offerings delivered via a special purpose acquisition company, DraftKings was a Wall Street darling throughout 2020 and parts of 2021. But the new year hasn’t exactly been kind to DKNG, shedding 7% since the first closing session of January.
The thing is, it’s only been four days into 2022 at the time of writing. As well, on a trailing-year basis, DKNG has been one of the worst-performing gambling stocks, hemorrhaging 48%. Still, there’s some hope that DraftKings can regain positive momentum.
Recently, the New York Gaming Commission confirmed that four mobile sports betting operators will be authorized to accept wagers shortly. DraftKings represents one of the four operators, which is incredibly positive for DKNG as the development occurs right in time for the NFL playoffs and the upcoming Super Bowl.
Of course, no one news item can take away from the fact that DKNG is incredibly risky right now. However, speculation has been the name of the game in the new normal, whether for gambling stocks, sports wagers or cryptocurrencies. Thus, DraftKings makes for an intriguing possible comeback opportunity.
Caesars Entertainment (CZR)
One of the most colorful gambling stocks with an even more storied history, Caesars represented a marquee brand in the burgeoning Las Vegas market. However, the company suffered severe problems, eventually leading to its largest operating unit filing for bankruptcy in 2015. Long story short, Eldorado Resorts came to the rescue, completing its acquisition of Caesars in July 2020.
Unlike many other acquisitions, the buyer assumed the name of the target, which will undoubtedly cause some confusion hundreds of years down the line when historians look back at this unique period in American civilization. But the move made sense given the brand recognition of Caesars.
Moving forward, CZR can certainly benefit from the speculative energy that bolstered gambling stocks last year. In addition to the Caesars buyout, the company formerly known as Eldorado also acquired the sports betting company William Hill. The sportsbook asset became Caesars Sportsbook and represents another one of the four sports wagering platforms that New York approved.
Though CZR did stumble in the early days of the new year, over the course of the trailing 365 days, shares are up 10%, reflecting relative stability.
Gambling Stocks to Buy: Flutter Entertainment (PDYPF)
While ample evidence points to a robust environment for gambling stocks to flourish in the U.S., speculation has no borders. Although international research into the topic of gambling-related issues presents a diverse kaleidoscope of outcomes, it’s clear that the U.S. isn’t unique regarding population segments wanting to roll the dice.
Therefore, on a cynical level, investors in vice-related opportunities may want to consider Flutter Entertainment. Based in Ireland, Flutter offers a range of wagering options, including various soccer (or football for the global audience) matches. Once left for dead because of the sports league cancellations, PDYPF stock bounced back sharply from the March 2020 doldrums.
Like the other gambling stocks, though, Flutter shares haven’t enjoyed a strong start in 2022, dropping 4.5% on a year-to-date basis. Nevertheless, I’d keep a close eye on PDYPF. Not only do we have massive American sporting events like the Super Bowl coming up, this is also a FIFA World Cup year.
Combined with the concept of retail revenge or people opening up their wallets aggressively to make up for lost time and experiences, 2022 could yet hold positive surprises for Flutter.
Penn National Gaming (PENN)
If I’m being completely honest, Penn National Gaming may offer significant potential as one of the gambling stocks to benefit from the rise in speculative behaviors during the new normal. However, I’d much rather wait for shares to finish correcting.
To be clear, PENN has already spread the canvas with red ink. In the first four days of 2022, the equity unit has lost 12%. During the trailing year, the hemorrhaging amounted to over 51%, with most of that loss coming in the half-year period (down 38%). It’s ugly wherever you look, yet it could still fall further.
Between September 2020 through late October 2021, it appears that PENN formed a bearish head-and-shoulders pattern. Thus, the fallout since early November coincides with the development of this ominous formation. Based on how the equities sector reacted from the Fed’s hawkish posture, more volatility could be in order.
Still, if we do get that correction, contrarians may want to consider scooping up the discount. Again, gambling stocks have a fundamentally strong year in 2022 because of multiple exciting events down the pipeline.
Gambling Stocks to Buy: Wynn Resorts (WYNN)
In terms of overall performance since the pandemic upturned the global economy, Wynn Resorts is admittedly unremarkable. True, compared against the average price of the spring 2020 doldrums, WYNN is up about 75% at the time of writing. But take the comparison from early May 2020 and you have a situation where the security has barely budged.
Then again, this ho-hum performance also applies to the downside. For instance, over the trailing year, Wynn shares are down 25% — terrible, yes, but not nearly as bad as some other gambling stocks. Also, its performance for the young new year is less than 4.5% down. Again, not great by any means but it’s comparatively superior to some names in this segment.
Obviously, the Covid-19 crisis imposed a particularly devastating impact to in-person, high-contact businesses. In 2020, Wynn Resorts delivered only $2.1 billion in revenue, down a horrifying 68% from 2019’s tally. In the first three quarters of last year, the company racked up $2.7 billion on the top line. Realistically, it’s looking at around $3.4 billion for 2021, still a ways off from pre-pandemic sales.
Still, consumers have been antsy, eager to reclaim their social lives. Thus, for some speculators, WYNN deserves to be on your radar.
Melco Resorts & Entertainment (MLCO)
True to form, gambling stocks are not the safest ideas to consider, especially with the Fed about to tighten the monetary spigot. Still, with the last two ideas on this list, I’m really going to put the emphasis on the keyword of the day. Therefore, please don’t invest a cent more than you can afford to lose.
First up, I’m going to mention Melco Resorts & Entertainment. Pre-pandemic, Melco was one of the more intriguing ideas for speculators of gambling stocks based on its geographical influence. Based in Hong Kong, the company features a number of elegant properties in Asia (primarily Macau) and Europe. With multiple emerging economies in Asia, MLCO seemed a great place to exponentially grow your money.
But then, the Covid-19 crisis hit us and the narrative has changed. Notably, the revenue profile took a massive beating, with 2020 and trailing-12-month sales down well below pre-pandemic levels. As well, after posting multiple consecutive years of net income, the company has absorbed steep losses.
Still, if you expect a global comeback from the crisis, Melco could surprise. For example, its City of Dreams Mediterranean could become the largest integrated premier resort in Europe. That might be worth sticking around.
Gambling Stocks to Buy: Lottery.com (LTRY)
I started this list of gambling stocks with a SPAC-based IPO and I’m going to end with a SPAC-based IPO. This time, the (possibly dubious) honor goes to Lottery.com. As I explained earlier, Lottery.com — which brings the fun of scratching off tickets to your mobile phone — is entering the public arena during a fundamentally robust period: people just can’t get enough of speculation.
Of course, that doesn’t necessarily make individual names among gambling stocks a guaranteed winner — far from it. Moreover, Lottery.com may have the highest “icky” effect because LTRY is about as opposite as you can get from an ESG (environmental, social, governance) play. Here’s what I had to say about the stock in my IPO coverage for Benzinga:
“To be sure, such gambling platforms have their dark side. As a 2017 op-ed from The Wall Street Journal mentioned, states essentially push lottery tickets on the poor, earning billions of dollars in the process. But because lotteries by nature are low-probability affairs, this system can keep underprivileged communities who lack access to financial education resources in a cynical cycle of poverty.”
Remember when I said you shouldn’t feel bad about gambling stocks because speculation has almost become the only way to get ahead in life? I might have to make an exception for LTRY, though it still might appeal to the risk-tolerant speculator.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.