4 Stocks To Gain As Sports Betting Breaks New Ground
Zacks Investment Research | Jan 17, 2019 08:47PM ET
The U.S. Supreme Court has now opened a gigantic sports betting market, helping the American Gambling Association to check $150 billion bet illegally on sports every year. Sports gambling won’t be regulated by the Federal Government anymore, instead the States will take charge.
Last October, the state of New Jersey handled more than a quarter billion dollars in bets, showing a 41% increase from the previous month. But, that’s just half of the $528 million that Nevada handled. Legal sports gambling, in fact, state-by-state is growing by the day. Mississippi, Delaware, West Virginia, New Mexico, Pennsylvania, Rhode Island are also leading the way.Governor of Massachusetts Charlie Baker, in the meantime, presented a proposal to legalize gambling on professional sports online and even at casinos in Massachusetts.
Many companies, big and diverse, are now positioned to gain from legalized sports betting. From casinos to sports clubs to gambling app makers, all will now be clamoring to enter the sports betting market to rake in a lot of moolah.
Some of the analysts have gone a step further and expect social media behemoths including Facebook (NASDAQ:FB) , Twitter (NYSE:TWTR) and Google (NASDAQ:GOOGL) to make the most of legalized sports betting, thanks to their humongous user base and infrastructure. Let us, thus, take a look at stocks that can provide outsized returns as U.S. legalizes sports betting —
Madison Square (NYSE:SQ) Garden
The Madison Square Garden Company (NYSE:MSG) is known for its engagement in live sports and entertainment businesses in the United States. The company owns two professional sports teams, including New York Knicks and the New York Rangers, which will surely make the most of the newly legal sports betting bonanza. Billionaire Dallas Mavericks has summed up by saying that “I think everyone who owns a top-four professional sports team just basically saw the value of their team double.”
The company currently flaunts a Zacks Rank #1 (Strong Buy). The stock’s estimated earnings growth rate for the next quarter is a whopping 260.5%, in contrast to the Leisure and Recreation Services industry’s expected decline of 34.5%. The company has outperformed the broader industry in the past year (+28.1% vs -17.5%).
MGM Resorts
The largest casino operator in the United States, MGM Resorts International (NYSE:MGM) generates nearly $4 billion in revenues from Las Vegas. Now, the company is looking to build a sports betting empire, much bigger than its casino operations. And the timing can’t be better. Needless to say, MGM Resorts will promote its sports betting app.
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The Las Vegas-based company has a Zacks Rank #3 (Hold). The stock’s estimated earnings growth rate for both the next quarter and current year are 5.9%. The stock’s earnings are projected to improve 24.1% next year, higher than the Gaming industry’s estimated gain of 14.9%. The company has outperformed the broader industry so far this year (+14.3% vs +12.5%).
International Game Technology
International Game Technology PLC (NYSE:IGT) , in particular, experienced a volatile 2018. It has jumped to a one-year high of $31 before falling to $14 in November only to stabilize at nearly $16 in early December. IGT is a big firm with 12,000 employees and manufactures more casino platforms than any other company. But, things started looking up for International Game Technology after it started branching out into sports betting.
IGT has already handled $12 billion in sports betting in 2017, which makes it a safe bet for investors.
IGT is predominantly a service provider and doesn’t need to face risks of managing sportsbooks. All it is required to do is to help companies like MGM Resorts by constructing infrastructure that contributes to the boom in sports betting. IGT, right now, possesses a Zacks Rank #3. Its earnings are expected to grow at a stellar rate of 153.3% in the next quarter, while the broader Gaming industry is estimated to decline almost 0.9%.
Boyd Gaming
Boyd Gaming Corporation (NYSE:BYD) is one of the largest casino operators in the United States. Both MGM Resorts and Boyd have signed a deal to share online and mobile gaming platforms. Boyd Gaming, by the by, has managed some of the biggest sportsbooks in Sin City. And now that sports betting is legal, Boyd is preparing to foray into other regional markets.
Boyd Gaming currently has a Zacks Rank #3. The stock’s expected earnings growth rate for the current quarter is 50%, while the Gaming industry is likely to tank 74%. At the same time, the company’s earnings growth rate for the current year is projected at 29.1%, higher than the industry’s estimated gain of 6.5%. The company has outperformed the industry on a year-to-date basis (+24.2% vs +12.5%).
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