Not just DraftKings, 4 online gambling trending stocks investors must know
Online gambling stocks remain the popular investment themes this year. While the pandemic has created a spike in new demand, each company has something different to offer.
Online gambling market is huge, and is currently growing at a astonishing rate. In 2018, the first full year of legal sports betting in the US saw $13 billion wagered, according to AGA. The number we saw in 2019 was double. Not to forget the economic shutdowns have affected many states’ finances. To help ease the pressure, some lawmakers have been pushing for online gambling legalization.
With legalization across the US, you only have to guess how big the market could be. Research firm Gambling Compliance predicts US betting market will range between $5.9 billion and $8.2 billion by 2024. Morgan Stanley believes US sports betting market could hit $10 billion annually by 2025.
Here are some top online gambling stocks in this burgeoning industry that you may not want to miss.
Esports Technologies is a Las Vegas-based company that specializes in online gambling for esports and competitive gaming. The company is well-known for facilitating betting on esports like League of Legends.
The company’s debut may be small compared to the Coinbase IPO this week, but its staggering gains these days certainly caught many attention. The stock skyrocketed last Thursday to over $36 and that led EBET stock to score a gain of more than 500%.
The reason for such a rally is simple. Many see eSports betting as a massive opportunity. The industry accounts for an estimated $1.8 billion of the $443 billion global gambling industry.
DraftKings is another trending name today. Its stock has had a wonderful start to the year as the online gaming market continues to stay at the forefront during the pandemic. The sports wagering company reached a deal to be the official partner of the NFL just recently.
While the new deal is certainly the key catalyst for the recent rally, it is certainly not the only reason why this growth stock held steady when the market exhibited weaknesses. Of course, there were the analyst upgrades and strong financial reports.
More importantly, there’s huge potential in the New York gaming market after the state-approved an online sports betting model. This bodes well for DKNG stock when it gets the license. There are good reasons to believe that it has more room to grow in the long run.
Similar to DraftKings, Penn National Gaming had a good rally since the start of 2021, rising nearly 25%. The company operates 41 facilities across 19 states, boasting the nation’s largest and most diversified regional gaming footprint. PENN stock has been a favorite among investors because of its expansion in online offerings. These new initiatives will come in handy for players to place their bets if they have decided to do it remotely.
Of course, for the company to recover strongly, people will have to go back to its casinos. With more people getting vaccinated, many are slowly feeling safe about visiting brick-and-mortar casinos. This would bode well for PENN stock as it’s not a pure-play online gambling stock.
Over the long term, Penn National plans to drive growth through a pivot to sports betting. So far the company has performed well in early markets like Pennsylvania, where its market share has grown to 13.4% in December. On top of that, Penn is also in a 20-year strategic partnership with Rivers Casino in New York. Through this partnership, the company seems to have its eyes on the potentially massive New York sports betting market.
GAN Limited offers technology solutions and a white-label platform for online casino and sports betting applications. GAN’s software-as-a-service is used by major casino operators. It helps to capture strong growth driven by a trend of legalization along with the rise of mobile gaming applications.
While the potential for the company to scale is certainly there, financial results for the fourth quarter of 2020 were a little disappointing. As a result, GAN stock has been severely under pressure since then. Revenue for the year was $35.2 million. But impressively, the management expects 2021 revenue to be between $100 million and $105 million.
Editing by Rachel Hu