Gambling Entertainment Stocks

Churchill Downs, Inc. (NASDAQ: CHDN) is another gaming stock with a lot of good news and a lot of good news priced in. The company continues to grow profits from the Kentucky Derby by creating more. There's still huge potential in the world of interactive entertainment, and for growth-seeking investors, this dynamic means that it's worth adding some gaming stocks to your portfolio. Esports Entertainment Group Inc. (NASDAQ: GMBL) operates as an online gambling company in Canada. It offers bet exchange style wagering, player versus player betting and betting on professional e. Tencent Holdings (0700.HK) and NetEase (NTES)—both with significant exposure to the online gaming business—appear to be some of the best plays among Chinese internet stocks, Shi wrote. Five gambling stocks with great potential in 2020. Given below are five gambling stocks that one should keep an eye on in regard to gambling in legalized sports. MGM Resorts (NYSE:MGM) Betting on a small scale in sports is considered unimportant and insignificant in Las Vegas, USA.

This has been a crazy year for stocks, to say the least.

The rotation and sector-concentrated movements have been the most influential I have seen over the past two decades. And, just because we flip the calendar from 2020 to 2021, don't expect that to change.

So for investors, this means it's game on -- literally. Here, we're going to dive into the gaming sector. This follows up on my top stock picks last year. While I didn't focus exclusively on gaming then, my 2020 names to own came from the group: Huya , BiliBili , and Sea .

The trifecta didn't do all that poorly, either. SE is up 412% year-to-date, BILI is up 304%, and HUYA only 8.9%. Sadly, it was HUYA I expected to be the top of the three. This is a good reminder of why we look at multiple names in a sector and spread our bets. If you balanced out with all three or even went top-heavy with HUYA, you'd still be happy. If you only went HUYA while watching the other two triple or quadruple, you would not very happy.

That said, I'm not repeating those three picks.

Rather, here's what I'm looking at, in no particular order:

• Activision Blizzard
• Turtle Beach HEAR
• Skillz via Flying Eagle Acquisition
• Super League Gaming
• Roblox (pending IPO)
• Roundhill Bitkraft Esports -- For those wanting to go broad and minimize single stock risk.

Activision Blizzard: This developer and publisher of entertainment software aren't flying under anyone's radar. I'd say ATVI is the obvious pick and one of the more conservative ones, too. The company just published the fastest-selling PC game to date, 'World of Warcraft' (WoW). The 3.7 million-plus units on the first day eclipsed the previous record held by the game 'Diablo,' which is also published by Activision. The company boasts those two, along with other blockbusters like 'Call of Duty,' 'Overwatch,' and 'Hearthstone.' There's no reliance on a single name here.

In its most recent third-quarter report, the company surpassed both revenue and earnings per share expectations with $0.71 per share on $1.77 billion in revenue. The fourth quarter is expected to slightly surpass expectations, but with the strength of 'WoW' and console upgrade cycle, Q4 numbers and the first half of next year could continue the strong growth trend.

Additionally, the online gaming service, Battle.net, will help ATVI continue to expand more deeply into eSports. Expect that to be a major catalyst for the company and it should cement 'WoW,' 'Overwatch,' 'Hearthstone,' and 'Starcraft' deeper into the gamer community.

Turtle Beach: This gaming-accessories provider has already doubled this year, driven by strong sales of headsets, PC mice, and keyboards. While the work-from-home trend kicked HEAR into high gear, the momentum has stayed with the company. In the third quarter, the company earned $1.04 per share vs. a $0.19 estimate. Revenue of $112.5 million trounced the $84.3 million estimate.

That was a growth rate of 141% year-over-year.

With $27 million in cash and no debt, HEAR boasts a strong balance sheet. And with the next-generation Xbox and Playstation hitting the markets, the company now has the two top-selling wireless headsets in the world. Given you can't even find a PS5 now if you want to, this could be a huge catalyst for quarters to come.

Skillz: Skillz is going public through a reverse merger with special purpose acquisition company FEAC. (A reverse merger usually involves having a publicly traded shell company buy a private company and allowing the private company's shareholders to trade their shares for a majority of the shell company's publicly traded shares, gaining control and voting rights.)

The company offers a proprietary gaming ecosystem, bringing together both players and developers. Its users average 62 minutes per day on the platform. That's longer than TikTok, Facebook , YouTube , or Snap .

The platform includes tournaments, leagues, player ratings and matching, loyalty rewards, payments, social features, anti-cheat, and 24/7 customer service. By opening the platform to developers, Skillz created a self-sustaining platform. Developer created content and more content draws more gamers, so developers create more content. More gamers equal more revenue for developers and more content equals more choices for gamers.

Management anticipates revenue of $225 million in 2020, representing 88% growth. That is expected to more than double to $555 million by 2022. If the company can capture only 1.5% of the iOS market opportunity, it should generate $8 billion in revenue annually in the future. For now, the total addressable market sits around $165 billion with $68 billion realistically in play. Skillz offers tournaments and contests from which it receives a 14% revenue take of entry fees. Already it has 34 games on its platform with over $1 million annualized GMV. Management expects the company to be positive by 2022 for earnings before interest, taxes, depreciation, and amortization.

Super League Gaming: This gaming community and the content platform is by far the smallest and most aggressive name on this list. It has only a $33 million market cap, and roughly one-third of that is cash on the balance sheet. It's tiny. Big risk, but big potential. The company is making a strong shift into eSports, with its 'Super League Arena.' Amateur eSports players compete for cash, scholarships, and prizes in a monthly tournament series. This includes games like 'Fortnite,' 'Apex Legends,' 'Rocket League,' 'Madden,' 'CS:GO,' and more.

SLGG plans to draw more spectators into the action by using its patented and scalable cloud-based camera character technology. It essentially allows placement of virtual cameras into video games.

Revenue of $718,000 remains on the small side, but that's up 105%. Registered users climbed 144% to 2.4 million while engagement hours rose 218% to 47.7 million. The company will need to concentrate on growing these names to grow revenue. Fortunately, they have the cash to do so.

Roblox: A global platform where people imagine, create, and share in an immersive, user-generated 3D world. The company calls itself an 'Imagination Platform.'

I have to put an asterisk by this pick since it hasn't gone public yet. If you can get an allocation, I believe you should do it. This looks like a 'sure-thing' IPO. I put that in quotes because there are no sure things in the market, but this has a high probability for a huge first-day pop. Roblox users have surged over 80% during the pandemic, gaining huge popularity in the teen and pre-teen crowd. Hour usage for 2020 is in the tens of billions. Its user base has surpassed 31 million.

The company is still in a grow-first mode, so it's losing money, but revenue should approach a billion dollars next year. This could be a tough one to chase on day one, so investors may need to be patient, but I'm sure there will be a pullback entry possibility in 2021 for Roblox.

Roundhill Bitkraft Esports: If you don't want to overthink it, then go with the top-tier exchange-traded fund in the gaming space: NERD. I've written about this one before. The management of the fund is solid. It gives broad exposure to the entire industry from sub-sectors to countries to size. It avoids concentration without over management. That said, the managers are actively following a set of investment guidelines. If you don't want the hassle of managing individual names, then this is the place to be. Even with individual names, I would still include an allocation to this ETF.

And there you have it. The five-plus one names on my list in gaming for 2021.

Tim Collins is a regular contributor to Real Money, TheStreet's Premium site and provides options trade ideas each day on Real Money Pro, our sister site for active traders. Click here to learn more and get great columns, commentary and trade ideas from Jim Cramer, Helene Meisler, Mark Sebastian, Paul Price, Doug Kass, and others.

At the time of publication, Collins was long NERD.

The casino gaming industry is constantly in a state of influx because of untapped markets and rapidly changing technology.

Potential goldmines like Japan and Brazil offer opportunities for major land based casinos to continue growing. And virtual reality gives the online gaming world a new dimension.

You can be sure that publicly traded casino companies will try to take advantage of upcoming technology and/or new markets.

That said, let’s look at 7 public casino companies that are eyeing major growth over the coming years.

1. Las Vegas Sands Corp.

Las Vegas Sands is the world’s largest casino company with over $14 billion in annual revenue.

This makes it seem like they don’t have much room for growth. And Sands has recently struggled because their Macau properties were stuck in the middle of a casino recession.

But the Sands Corp. is poised to take off in the future for two major reasons:

Gambling Entertainment Stocks 2019

1. Macau’s gaming market is on the rebound.

2. Sands never stops looking for new areas to expand to.

Beginning with the first factor, Macau started their downturn in 2014. This is the point when the Chinese government began cracking down on money laundering and government corruption.

Many Asian high rollers were targeted during the money laundering investigations. Eventually, Chinese high rollers stopped pouring into Macau over fears that they’d be hassled.

The good news, though, is that the anti corruption campaign is slowing and Macau casinos are rebounding. This works for Las Vegas Sands, which owns the following casinos in the special administrative Chinese area:

• Sands Cotai Central
• Sands Macao
• The Parisian
• The Venetian Macao

The Sands Corp easily survived the Macau recession because they’re so focused on diversification. They have properties in Las Vegas, Macau, Singapore, and the American East Coast.

And they’re looking to expand their reach to both Japan and Brazil in the future.

Japan is the most realistic venture because the country legalized casino gambling at the end of last year. Las Vegas Sands has pledged to build a resort worth up to $10 billion.

Japan has 127 million residents and the world’s third largest economy. This is why many see the Land of the Rising Sun as the world’s next big casino market.

Sands is also looking into Brazil as a potential casino destination.

The only problem is that Brazil is years away from legalizing casinos. But this is still a country worth lobbying in because they have 207.7 million people.

2. MGM Resorts International

MGM is the biggest rival to Las Vegas Sands because they earn $9.5 billion per year and have properties in both America and Asia.

MGM is especially dominant on the Las Vegas Strip, where they own everything from casinos to arenas. Here’s a look at their Vegas Strip properties:

• Adventuredome
• Aria Resort & Casino
• Bellagio
• Circus Circus Las Vegas
• CityCenter (jointly owned with Dubai World)
• Delano Las Vegas
• Excalibur
• Luxor
• Mandarin Oriental
• Mandalay Bay
• Mandalay Bay Convention Center
• Mandalay Bay Events Center
• MGM Grand Las Vegas
• MGM Grand Garden Arena
• Monte Carlo
• New York New York
• Skylofts at MGM Grand
• Slots A Fun Casino
• The Mansion at MGM Grand
• The Signature at MGM Grand (jointly owned with Turnberry Associates)
• The Mirage
• T Mobile Arena (jointly owned with AEG)
• Vdara
• Veer Towers

Casino gaming isn’t booming on the Vegas Strip, but entertainment and other ventures are. This is why MGM is poised for success with venues like their new T Mobile Arena, which hosts concerts and conventions.

The company has done well at expanding across the US. They own casinos in Atlantic City (Borgata), Biloxi (Beau Rivage), Detroit (MGM Grand), Maryland (MGM National Harbor), and Massachusetts (MGM Springfield).

Where MGM looks to really gain the most growth is their Macau properties. They own Grand Macau and will soon open Casino Cotai.

As covered before, the Macau casino market is on the upswing. And this means that MGM could earn some major profits in the coming years.

MGM is also under consideration for a Japanese casino license, which would be very lucrative.

3. Amaya Inc.

The online gaming company Amaya made waves in 2014 when they purchased PokerStars for $4.9 billion.

The Canadian business didn’t immediately capitalize on their investment because online poker’s popularity has been steadily decreasing over the years.

It also didn’t help that former CEO David Baazov stepped down after he was indicted on insider trading allegations.

Amaya weathered the storm, though, and have been diversifying their assets over the past few years.

The company is focused on building their casino and sportsbook products while keeping internet poker steady. The plan is working too because their casino and sportsbook now account for over 25% of their revenue.

The entire reason why Amaya purchased PokerStars for such an outrageous price is that they saw value in the customer base. The company’s number of registered users has grown to over 108 million.

It appears that Amaya’s strategy of offering more than just poker is paying off. And they’re also in the midst of changing their image too.

The company will soon change its name to the Stars Group and move their headquarters from Montreal to Toronto. This should help in distancing them from Baazov’s insider trading scandal.

4. Wynn Resorts

Wynn Resorts has done a fine job of creating a luxury casino resort brand that spans from Las Vegas to Macau.

But Wynn has also struggled too because of their Macau properties. They own the Wynn Macau Resort, Wynn Palace, and Encore at Wynn Palace – none of which were immune to the Macau recession.

But like the Sands Corp. and MGM, Wynn should rebound nicely along with the Asian gaming destination’s economy.

Another move that will help the company experience more growth is their upcoming property in Massachusetts. Wynn is currently building Wynn Boston Harbor just outside downtown Boston.

The $2.4 billion venue will feature 629 hotel rooms, restaurants, retail outlets, convention space, and a spa.

Wynn hasn’t forgotten about their Las Vegas roots either.

CEO Steve Wynn announced that he’s overhauling the Wynn Las Vegas by 2020. The renovations will include more nongambling activities along with a clear water lagoon.

5. Net Entertainment (a.k.a. NetEnt)

Net Entertainment has been running internet casinos and supplying online software since the mid-1990s.

This makes them one of the oldest companies in online gaming. And they don’t show any signs of slowing down in the near future either.

NetEnt has produced a number of top online slots hits over the years. Here are some of their most popular games:

• Aliens
• Arabian Nights
• Blood Suckers
• Blood Suckers II
• Dead or Alive
• Drive: Multiplier Mayhem
• Gonzo’s Quest
• Guns N’ Roses
• Hall of Gods
• Jack Hammer
• Jack Hammer 2
• Mega Fortune
• Mega Joker
• Starburst
• Wild Wild West: The Great Train Heist

Net Entertainment has also done a great job of entering the live dealer gaming space. They now feature different variations of live blackjack and roulette games.

They’re also quite good at adapting to industry trends.

This is why we see Net Entertainment continuing to lead the internet gaming world for years to come.

6. Genting Group

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No casino company is more international than the Genting Group.

The Malaysian business has properties in China, Hong Kong, Singapore, the Caribbean, the UK, and the US. Here are some of their notable establishments:

• Resorts World Manilla
• Resorts World New York
• Resorts World Sentosa (Singapore)
• Crockford’s Club (London)
• The Colony Club (London)
• Genting Chinatown Casino (London)

This company has also planned projects in South Korea, Las Vegas, and Miami, Florida.

Based on their experience in navigating international casino waters and continued growth, we expect the Genting Group to continue spreading their brand.

7. Boyd Gaming

Boyd Gaming is different from the other companies on this list because they have a narrower focus. Specifically, Boyd Gaming builds regional casinos in the United States.

They currently feature 22 casinos throughout eight states, including Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Nevada, and New Jersey.

The company did have one major hiccup in 2006 when they were building a Las Vegas Strip casino. But they were forced to abandon the project and sell the property for $350 million.

In hindsight, this was a good turn of events because Boyd avoided opening a Vegas casino during the American recession (2008 10). Since then, they’ve continued to thrive by serving different regions in the US.

Boyd Gaming also has an internet gaming partnership with California’s Pala Interactive and GVC Holdings (under former bwin.party brand). This puts the business in a good position to take advantage of the US online gaming market when it finally expands.

Conclusion

The casino gaming world is far from reaching its peak. This is why publicly traded companies continue to invest in new properties and lobby governments to legalize gambling.

The question remains which of these companies gain the most from budding casino markets and new technology.

Las Vegas Sands has proven successful at winning over government officials and earning casino licenses. This includes when they won the right to build the Marina Bay Sands in Singapore over MGM.

Both companies will square off in Japan again with another casino license on the line.

Another thing to watch in the publicly traded gaming world is the development of Amaya.

I covered how the internet gaming giant has been diversifying to casino gaming and sports betting. Will they eventually become a giant in the online casino world?

It’ll also be interesting to see how Genting World’s new projects come along because they’re set for expansion in Miami, Vegas, and South Korea. Perhaps they can grow to the level of MGM and Sands Corp if these projects go well.

I’m also interested in any up and coming businesses that could break into the upper echelon. That being said, it’ll be fun to watch these developments in the coming years.