Best Online Casino Stocks to Watch in 2020

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(— March 6, 2020) — Investing in gambling stocks requires that you have a vast understanding of the casino market dynamics before committing yourself financially. Gambling stocks are highly volatile, and before putting your hard-earned money in the market, you have to appreciate the presence of a myriad of risks in the venture. 

In 2018, casino stocks experienced torrid times struggling in the stock exchange, which left many people with losses. The poor performance of the industry players made people wonder whether it was worth investing their cash in casino stocks in 2019. Are the stocks going to perform any better in 2019? Is it a good idea to invest in the casino industry today? 

Driving elements of the casino stock market

Before deciding on whether to put some money in the $500 billion industry, it is imperative to understand the key elements that drive the casino industry today. 

To help you out of this dilemma, we have explained the crucial driving forces of the market below. These are the elements that dictate the performance of casino stocks today and that will impact them in the years to come. Here is what you need to know. 

Choose the specific players that you want to bank on 

The entire betting ecosystem is made up of 3 key players — the casinos offering the games, game suppliers who provide the gambling resources and Real Estate Investment Trusts (REITs) who own the land where the property stands.

Most investors opt for casinos themselves, because they are unaware of the existence of the other two options. The top casino brands such as MGM Resorts International, Las Vegas Sands Corp, Monarch Casino & Resort, and Wynn Resorts Ltd are dominant in the stock exchange market. Although it is a good idea to invest in these casinos, you should understand that their share price is very volatile and is affected by many external factors. 

Game suppliers such as Playtech online brands, IGT, Scientific Games, Playtech, and Microgaming are also an excellent but risky option to invest in today. Although their share prices are driven by demand from casinos and gamblers, their performance is often steadier than that of individual casinos. The suppliers hold a lot of leverage in the industry, which means that they control a lot of what is going on in the casino industry. 

The REITs such as MGM Growth Properties and VICI Properties are a new entrant in the game, and they are proving to be one of the safest options for those who don’t want to take high risks. Their market share rarely dips, which means that their share price will be steady for long periods making them a safe bet. 

Legislation still plays a major role 

Although casino stocks are primarily dependent on the demand for casino products, regional laws play a vital role in determining the performance of stocks in the market. In the US, for instance, the legislation has been a significant hindrance for years as the laws generally stifle the life out of online sports betting and other forms of casino gambling. 

There is, however, hope for better things to come following the 2018 Supreme Court Ruling that paved the way for states to legalize sports betting and other forms of gambling. This ruling may see an increase in the number of people using casinos, and result in the growing demand and possibly better performance of the US casino stocks.

Other regional laws that you should keep your eyes peeled for include those that relate to the tension between China and Macau, the new UK Gambling Commission regulations and crackdowns on money laundering in the casino industry.

Regulators hold keys to the success doors of casino stocks 

Another element that drives the performance of casino stocks is the vast dependency that the stocks have on regulators. Although the industry is relatively old and mature, regulators have a lot of control over investments. From issuing licenses to renewing tenures for casinos to keep operating in specific regions, the regulators can make stocks tumble overnight through a single decision. 

Before investing in stocks, dig deep into the attitude of the regulators to the companies that you want to bet on. See whether the authorities tend to make rash decisions that might sink your boat in any minute. Research and look at the trends of the specific company you want to invest in and see whether they are greatly affected by regulators. This knowledge can help you make more informed decisions. 

To invest, or not to invest… 

The decision on whether to buy casino stocks in 2019 still solely rests on your willingness to take risks. But the general feeling is that things are looking up. The betting industry has been on the rise for the last decade, and the upward trend doesn’t show any signs of stopping any time soon, although hiccups are not unheard of.

With favourable legislation and expansion into new large markets such as Japan which has a $40 billion potential, the performance of casino stocks is likely to be fair in 2019. The tricky part is knowing the segments which will perform better than the others. 

If you are new to investing in stocks and are looking to get started, then the casino industry might not be the best place to begin your career because of its volatility. But it is a good choice for seasoned traders who understand the dynamics of the stock market to the core. 

If you invest in the industry in 2019, then know that anything can go wrong. But there is also the possibility of walking home with a huge smile after you get great payouts and dividends at the end of the financial year. After all, the casino stocks yield large dividends which makes them worth the risk.