Online Casino Stocks to Watch in 2020
Anyone who enjoys playing at an online casino may have considered investing in stocks in the industry. After all, playing the stock market is akin to gambling in many ways. The casino market can be fairly volatile, and investing always presents a certain amount of risk. However, the adage that the house always wins certainly does not apply to the stock market. With some shrewd and timely investment, you stand a good chance of making some real gains.
The online gambling market has grown considerably over the past few years, and shows no signs of stopping. Worth billions of dollars, it presents many opportunities for investment. To get an idea of the companies that could be worth backing, there is an up to date list of the best online casino sites at MrCasinova.com. The casinos found here are a good starting point, as they are all guaranteed to be licensed and legitimate. Not all of them are publicly traded, so a bit of background research will also be required.
Online Casinos are Resilient
2020 has so far been a difficult year for the global economy. Widespread closures of public venues have led to massive revenue losses across many sectors. Land casinos have naturally struggled as they were forced to close their doors. In China, it was reported that gambling revenue for the month of April was down almost 97% compared to the same month in 2019. Stocks in almost all land casinos have dropped in parallel.
Experienced stock-market players could use this as an opportunity to buy low, but it remains to be seen whether all casinos will recover. By contrast, the online casino industry has shown some resilience through the pandemic shutdown. Casino sites, being wholly online, have managed to carry on with business as usual. Not only that, but many of their customers have found themselves with more time on their hands, urged to stay at home and ordered not to socialise. In many ways, the conditions for the online casino sector could not have been better.
In fact, the industry has shown itself to be resilient to many market shocks. Growth continued through the financial crisis of 2008, and was unaffected in the UK by the Brexit vote. Investment in this sector really could be a safe bet.
Effects of Compliance Costs
One thing that is changing for online gambling is the tightening of regulations in several markets. As companies have to spend more in order to comply with the rules, this can eat into their profits. Many casino providers have seen a drop in share price as a result, even if their revenue continued to rise.
The most highly regulated online gambling market today is the United Kingdom, and there continues to be public and political pressure to tighten the laws still further. When choosing a site or provider to invest in, it’s important to know in which markets they operate. Look to see if there are any changes to the rules on the horizon, which may cause an operator to have higher compliance costs – or leave the market altogether. Providers with a customer base in many different jurisdictions are better positioned to manage such situations.
If you’re thinking of making an investment in online casinos, you may not have considered anything beyond the casino sites and their parent companies. However, there is another investment opportunity in the gaming software providers. These are the companies that create the virtual slots and table games that populate online casinos.
While some of these companies did take a temporary hit in the first quarter of 2020, they quickly bounced back to their former levels. Game developers have the advantage of providing their products to many different sites, and will always have a buyer for their products. If the online gambling sector were to shrink overall, we could expect to see a dip in the share price of the game providers as sites using their software folded. However, despite setbacks, there is little to suggest that this will happen any time soon.
Look for a Diverse Portfolio
If we look at the casino providers that have been doing well over the last few years, we can see that many of them are the ones that have a diverse portfolio of game types. This versatility means that many different types of players are served. It also means that there is something to fall back on, should one sector fail unexpectedly.
2020 also provided a living example of this. Sports betting took an enormous hit, as seasons were cancelled or postponed around the world. Those operators that offer only sports betting have struggled, while those with casino games alongside their sportsbook have managed to retain much of their customer base. The evidence suggests that many sports bettors have switched to playing slots and other games while waiting for their favourite sporting events to restart.
Slot games are the most popular among players, so providers that have these as their mainstay present a solid investment. However, it is a good idea to look out for those that also have poker, bingo and growth areas such as live casino games in their remit.
While the sports drought has seen shares in betting companies tumble, those that offer odds in esports markets haven’t taken such a big hit. Although many of the big video games competitions take place in arenas with the public in attendance, the nature of the games means that many events can be modified rather than cancelled or postponed.
Due to the lack of live sporting events, there has been an increased interest in many types of esports tournaments. Notably, virtual car racing has gained a larger audience around the world. This uptick in interest can only spell good news for the future of esports. Some specialised esports betting sites exist, as well as a few of the major sites also offering odds on the various events. As esports continue to grow, a gambling site that includes this sector could be a wise investment.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes