5 Best Gambling Stocks to Buy

Top 5 gambling stocks to buy

Last Updated August 9th 2021

9 Min Read

Just like other sectors in the market the gambling industry was hard-hit by the COVID-19 pandemic in 2020. The gambling hotspot of the world, Las Vegas came to a standstill as strict lockdown measures were widespread causing casinos and bookmakers across the globe to seize footfall and were forced to shut their doors temporarily causing huge declines in revenue for most.

However, it wasn't all destructive. Thanks to the forced pandemic it has allowed online gambling and sports betting apps to take center stage, especially as more US states give the green light to legalise such activity. And boy has this market taken advantage.

Take one gambling stock that has made this list, Draftkings Inc (DKNG) as a prime example who in 2020 saw shares rise above 400% and rose by 146% within the last quarter reaching a revenue result of $322 million from $131 million a year prior.

Due to the powerful shift into the online gambling market, some of the biggest gambling players within the market who have their physical presence seen and felt worldwide are now looking to or have made the transition into the digital market. Take MGM Resorts International’s (MGM) BetMGM as a prime example whose revenue accounted for an impressive 90% of the stock's 2020 total revenue within the company’s Q1 2021 performance.

Looking ahead, the global gambling market is expected to continue its rise and is predicted to reach over $510 billion in 2021 at a compound annual growth rate (CAGR) of 11.94%. Whilst looking into the coming four-year outlook, the market is expected to reach over $670 billion by 2025.

Looking at the online gambling market, this sector is also poised to grow well with analysts predicting that the market could reach $75 billion in 2021 and could potentially reach just under $100 billion by 2023 at a CAGR of 11.4%.

With strong visible growth ahead for this evolving industry as more US states waver the 2018 federal ban on sports betting, here are the top 5 gambling stocks that look to be leading the pack right now in 2021.

1. Caesars Entertainment (CZR)

The iconic Las Vegas-based company Caesars Entertainment Inc (CZR) comes in as one of the top gambling stocks to buy in 2021 as momentum continues to push this stock further into profitability.

Within the stock's recent Q2 2021 report, CZR managed to surpass estimates for the second quarter as the stock confirmed net income of $71 million compared to a net loss of $100 million a year prior, net revenues reached $2.5 billion compared to $127 million in the same period YoY, with its Las Vegas operations contributing a whopping $855 million in net revenue compared to its $109 million revenue within the same period in 2020.

Caesars Digital segment also managed an impressive result within Q2 as it totaled $86 million compared to $11 million in 2020. Furthermore, this segment remains one of the stock’s main focuses for the future as the company has announced a $1 billion investment plan to promote its new sports betting app that also includes the William Hill acquisition that was finalised within the second quarter.

Following the success of Q2, CZR managed to once again draw in a positive return with adjusted earnings per share of $0.48 compared to an adjusted loss of $1.25 per share within the same period last year, confirming a 284% surprise based on analyst consensus EPS forecast of -$0.26.

Looking to the future, analysts have raised their consensus EPS target to $0.13 and set a high EPS estimate of $0.75 if the stock continues momentum. Within its share price, CZR is currently trading at $90.50 upon writing with JP Morgan, Morgan Stanley and Deutsche Bank analysts all giving the Caesars Entertainment stock a consensus ‘Strong Buy’ rating, alongside their prediction that the stock will rise by a minimum 40% within its share price to at least $127.00 moving into second half of the year.

2. Penn National Gaming (PENN)

Penn National Gaming Inc (PENN) is one of the largest American operators of casinos and racetracks with over 44 facilities spread across both US and Canada.

The performing gaming stock recently announced its second quarter 2021 results which blew past expectations.

PENN’s revenue reached $1.55 billion over the quarter, a 406% rise over the same period in 2020 and a rise above analysts expectations for Q2 of $1.45 billion. The northeast segment was proven to be the stock's main contributor with total revenue rising by 535.3% to $652.5 million for Q2.

Off the back of such a successful performance, PENN recorded an increase within its earnings to $1.17 per share beating analysts expectations of $0.90 per share for the quarter.

The Penn National Gaming stocks positive momentum doesn't look like it is going to be stopping anytime soon as PENN also announced within its report that the company intends to acquire Score Media and Gaming (SCR), a Canadian leader in sports media, sports betting and esports that draws in millions of users across the globe daily. This merger will undoubtedly lead this partnership to become one of the largest digital platforms across North America.

The deal with SCR stock is looking set to complete within the first quarter 2022. But in the meantime, PENN still has a bright path looking deeper into 2021. PENN holds a 36% stake ownership within the digital media company Barstool Sports and secondly, PENN’s strong consumer demand remains apparent across the US, Canada and worldwide through its digital presence.

Currently, up by 6.02% pre market to $72.26, four analysts who are covering the stock are expecting PENN to show an upside of above 80%, with JP Morgan analysts Joseph Greff labeling the Penn National Gaming stock a ‘Strong Buy’ and set a price target of $142.00, a 96.51% rise from where the gambling stock sits on the market today.

3. Wynn Resorts (WYNN)

One of the most popular and luxurious residences across the Nevada state is that of Wynn Resorts Limited (WYNN). Wynn Resorts Limited is a developer of high-end hotels and casinos that has now stretched its arm into the online gambling world with Wynn Interactive.

Following Wynn Interactive’s recent merger with Austerlitz Acquisition Corp I (AUS), a special purpose acquisition company (SPAC) it is now ready to become a publicly-traded company within its own right.

Leading on from its Q1 2021 performance, WYNN has just released its Q2 2021 results that are continuing to show a rise and sweeping past analysts' expectations predominantly due to the ease of travel and leisure restrictions across the globe.

For the second quarter, WYNN managed to obtain revenue of $990.1 million compared to $85.7 million in the same period in 2020, a direct result from the brands Las Vegas, Wynn Palace and Wynn Macau operations which rose to $355.1 million, $270.4 million and $184 million respectively over the quarter.

The rise in demand has significantly helped the company financially including within its earnings with WYNN reporting an adjusted loss of $1.12 per share compared to an adjusted loss of $6.14 per share in 2020, beating analysts estimates of an adjusted loss of $1.41 per share for the quarter.

Moving ahead, WYNN is set to continue developing its WynnBET online casino and sports betting app by looking to enrol the app across various green light states within the coming months, alongside enhancing the stocks marketing strategies to draw in further results ahead of the NFL sporting season.

Based on five Wall Street analysts who are covering the stock, Wynn Resorts (WYNN) has been given a consensus ‘Strong Buy’ rating, alongside a medium price target of $129.00, showing a 30.73% upside from where the gambling stock sits today.

4. DraftKings (DKNG)

Arguably one of the biggest online gambling winners in 2020 was Draftkings Inc (DKNG). And moving into 2021, DKNG is still continuing its winning run with its recent second-quarter results which has led the leading gambling stock to raise its full-year guidance.

Within the stock's recent Q2 2021 results, DKNG reported a revenue increase of 320% over the quarter to $298 million compared to $71 million a year prior, with the stock’s Monthly Unique Payers rising by 281% over the quarter accumulating to approximately 1.1 million monthly payers joining in on Draftkings activity over Q2.

Moving forward, DKNG is active with its sports betting app as the app has been successfully enrolled out across 12 states within the US, with its iGaming being live in 4 states. This avenue will continue to expand further as more states set to legalise online betting. Additionally, DraftKings recently announced a multi-year deal with the NFL data provider Genius Sports, to further fuel growth plans for the long term outlook.

In light of the stock's continued positive performance, DKNG has raised its fiscal 2021 revenue guidance to a range of $1.21 billion to $1.29 billion, representing a 88% to 100% growth in revenue year-over-year. Whilst analysts who are covering the Draftkings stock have set a forecast for DKNG to reach revenue of $1.16 billion, alongside giving the stock an average price target of $75.00, showing an upside of 48.57% from where the stock sits today at $50.48.

5. VICI Properties (VICI)

VICI Properties Inc (VICI) is an American real estate investment trust company that specializes in casinos properties, hotels, racetracks and more which holds over 18,000 facilities combined across the US.

In recent days the stock has not only released its second-quarter 2021 results which saw revenue rise by 45.4% year-over-year to $376.4 million, it also witnessed earnings rise to $0.54 per share beating expectations by $0.07. However, the additional bright news for the stock is that the company has also announced that it intends to buy MGM Growth in a deal worth a reported $17.2 billion that aims to strengthen the stock’s real estate value that will also help enable future growth prospects.

Even though this acquiring adventure seems to look to add fantastic value, VICI stock dip slightly following the news to where it sits on the market today at $30.63.

Aside from this mega growth spurt, VICI also made a cash deal in partnership with Apollo Global Management to acquire Venetian Resort's real estate, Palazzo and Sands Expo on the Vegas strip with VICI owning the whole real estate element that is looking set to be finalized within the coming weeks.

Despite the slight decline within its shares, analysts are remaining bullish on this real estate stock and have given VICI an average price target of $36.00, a 17% increase from where the stock sits on the market today. Alongside, Zacks Investment Research has set a forecast that the VICI Properties stock will grow its earnings with an EPS growth rate over the coming 3-5 years by 7.23% as this real estate stock continues to grow its presence across the US.