We all know the US stock market ebbs and flows at all times, but nothing quite like 2020. We’ve seen all-time highs, followed by a massive crash, then new highs in record recovery time, to, well, more ebbs and flows as election season nears.
Investors are looking anywhere and everywhere for value — however, is the gambling industry one of them? Because it should be. Aside from technology, the betting sector has rallied far quicker and faster than most industries in the COVID-19 era.
And there’s reason to believe that rally is only just beginning. Gambling laws have been loosened in recent years, surged by the Supreme Court lifting a federal ban on sports wagering in 2018. Close to 20 US states have legalized betting on sports since then, with many more expected to follow suit in the coming years.
Every investor needs to have gambling in their stock portfolio. In particular, these four stocks should be atop your buy list:
DraftKings (stock ticker: DKNG)
Boston-based DraftKings sets the tone for our list — a digital-first corporation. Gambling, much like every other industry, is quickly pivoting to the digital world that’s only been accelerated by the pandemic.
And believe us, DraftKings is all-in on digital rather than clinging to land-based casinos like traditional betting corporations. That tech savviness, plus a well-recognized brand (with partnerships with the likes of ESPN and Turner Sports), will help it eat up market share in online sports betting, daily fantasy sports, and casino — all three of its revenue generators.
The group barely went public in April, closing its first day of trading at $19 per share. Since then, it’s ballooned to as much as $60. We’re of the belief its runaway remains huge as sports betting becomes more and more mainstream within the United States.
Flutter Entertainment (PDYPY)
Another publicly-traded company primed to capitalize on the shift toward digital is Flutter Entertainment. Earlier this year, it acquired competing entity The Stars Group. The merger makes Flutter a betting juggernaut to be reckoned with.
And here’s the main difference between Flutter and the aforementioned DraftKings. Flutter owns multiple online properties including FanDuel, Poker Stars, BetFair, SportsBet, and a slew of others. These are some of the most-used online sportsbooks, along with offshore bookies found on Sports Betting Sites. Moreover, the properties also give them a stake in the global betting marketplace, not just the US one like DraftKings. Having that extra exposure to international markets makes Flutter a highly attractive investment.
Penn Gaming (PENN)
Like the previous picks, Penn Gaming made a splash of their own to start 2020.They paid $450 million for an ownership stake in Barstool Sports media property. The deal gives them 33 percent ownership of Barstool, which balloons to 50 percent in 2023.
Penn is leveraging the Barstool brand in its sports betting empire — rebranding its physical sportsbooks and launching a new digital betting app as the Barstool Sportsbook. We believe that’s a smart move given the brand affinity Barstool has with 20-something-year-olds thanks to mega-popular personalities such as Dave Portnoy and Dan Katz aka “Big Cat.”
Furthermore, PENN perfectly symbolizes how gambling stocks have performed in the volatile stock market of 2020. Amid the March crash, PENN’s share price bottomed out to $4. Only six months later, it peaked at $74 — an eye-popping turnaround of almost 2000 percent. Wow.
BETZ Sports Betting ETF
The online gambling industry is very much like a gold rush. Dozens of entrants — both old and new — are trying to “strike gold” in the sector right on the cusp of its explosion.
Given that, it’s safe to say the marketplace will be highly competitive and obviously, only a few corporations will win big. Picking the exact winner(s) of the group poses some risks and we all know investors try to mitigate those.
Enter BETZ. This is an ETF that holds dozens of corporations within the betting sector. Currently its top-5 biggest holdings are William Hill, PointsBet, Scientific Games, Penn Gaming, and Kindred Group (Draftkings is sixth and Flutter is eighth).
More or less, a bet on BETZ — see what we did there? — is a gamble on the success of the entire gambling industry rather than one specific organization. This is perfect for those looking for a more safe and passive way to invest into the sector at-large.