How the Average American Can Invest in Casinos in 2019

October 26, 2019 John Isaac

Investing in the stock market is a gamble, but it’s also one of the safest ways to invest. It’s always recommended to have a diverse portfolio, meaning investments spread across various industries and markets. That way, if there’s a downturn in one area, it might be compensated by an upswing in a different industry.

Inside a Las Vegas casino with Slot machines.

Every Slot machine makes money. But outside of gambling, how can it make you money? © Wikimedia Commons

And one of those new areas of investment that should be looked into now more than ever: gambling.

A few states have legalized online betting, a few are on their way to legalization, and a few more are thinking about it. This means that now may be the perfect time for someone to dip their toes in. (The more days that go by, the more expensive the buy-in can become.)

Investing in Innovation

Those who play at offshore online casinos are already aware of the importance of a good software provider. But if the gambling experience is limited to brick-and-mortar casinos, the player may not be aware of the different software provider options. They exist, they’re hyper-competitive, and they’re crucial to an online casino’s ongoing success.

For example, a leading international software provider NetEnt saw an 8% sales growth in 2018. However, because NetEnt is traded on the Nasdaq Stockholm, Americans would have to pay foreign market commission fees, which are (almost always) higher than local markets. The same goes for the London Stock Exchange, where shares for major American software provider 888 Holdings are bought and sold.

Then again, many discount brokers offer foreign stocks, and spreading out investments into worldwide markets is a great way to diversify a portfolio. Research the fast-growing, most innovative, and (preferably) established casino software providers to determine risk level and payout potential.

Investing for the Dividends

The biggest and most established casino companies are reliable sources for stock dividends. However, the ups and downs of revenue still make it an unpredictable method of passive income. But think about it: if a casino is set up and established, a matured business with steady operations, they’re less likely to make high-risk new investments. Instead, they’ll send dividends back to their shareholders. Of course, if a low-risk new market becomes a promising avenue, the dividends might take a break – but the stock value should grow (assuming the new territory is profitable). There’s more on that in the next section, but for investors looking for steady payouts, a casino company with a household name is one of the safer bets.

Gambling on Growth

On top of all the US states legalizing online and on-site gambling, expansion into foreign territories can be a hugely profitable venture. For example, Macau generates triple the yearly gambling revenue than Las Vegas ($10 billion vs. $33 billion). For American bettors, that likely comes as a big surprise, but the gambling habits of folks in that area of China simply spend more money at the casino than their American counterparts. To name a few potential investment avenues, SJM Holdings, MGM, Wynn, Sands, Galaxy, and Melco all have licenses to operate in Macau. Japan is a market that many major operators are keeping a close eye on. Right now, some forms of sports betting and the lottery are legalized, but that about covers it. Otherwise, placing bets is strictly outlawed – for now. While new legalization seemed more promising in early 2019 than it did in late 2019, one of the Macau licensees opening a spot anywhere in Japan would be a major win for investors. It’s potentially a worthwhile gamble for investors with the capital to take a big chance on a huge reward.

That’s not to mention all the US states that could offer online or brick-and-mortar licenses to casinos and sportsbooks at any given moment. When someone’s already invested in the company that’s set to expand into these new territories, they can sit back, relax, and enjoy the uptick in the portfolio value.

DISCLAIMER

Investing in any form is risky. Like playing at a casino, never put in more than you can afford to lose. The advice herein is for consideration purposes only and is not meant to take the place of professional guidance. Every portfolio and financial situation are different, making a broker a worthwhile investment if you have the capital to hire one. Their insights will be more valuable than this article or any other, as they can look at your account firsthand and provide personalized feedback.

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