Are Casino Stocks Cyclical?

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Gambling is likely as old as when humans first developed the mental capacity to conceive it. Thus, it should come as no surprise that this activity enjoys a great deal of popularity in most corners of the globe. Even with religious/cultural obstacles in place, the industry encompassing casino-style gambling and sports betting is continuously gaining ground. The newest analysis suggests that it is en route to start raking in annual revenues of over $876 billion in the next five years. Online casino games play a massive role in this figure, as they are currently responsible for yearly revenues of over $90 billion. Their share in the overall total dramatically increases year on year thanks to widespread smartphone adoption and internet penetration.

Thus, with such impressive growth, it would appear that investing in casino stocks is a no-brainer. Yet, those researching this option should know that the stock prices of the entities operating in the sector encounter peaks and valleys. According to Ryan Fuhrmann, the author of The Banking Industry Guide, they are cyclical. Below, we get into what that means, which are the best stocks on the market you should consider, and how to approach investing in them.

Why Are Casino Stocks Cyclical?

There is no doubt that the casino industry is expanding rapidly, with demand being at an all-time high. Thus, in terms of legality, countries around the globe, the same as US states, are looking to implement gambling regulations to rake in tax revenues that they are currently losing due to their residents playing at neighboring territories or on internet platforms.

So, the industry swells thanks to gambling becoming less taboo everywhere and governments looking for new ways to fill their coffers. However, this sphere is a gentle one, as its heavily reliant on decisions made by its regulatory bodies, who get affected by government pressure and policies. For example, recently, in the UK, a survey showed a rise in problem gamblers. That led to the UK Gambling Commission imposing new regulations that make the online slot experience less addictive, limiting its gameplay speed. The move turned off many players, as regulators are now more than ever struggling to find the right balance between imposing responsible gambling measures while ensuring that this sphere thrives.

National and state regulation of other industries can also affect this one. The same holds for shifts in the economy. In the past, land-based casinos saw dips in foot traffic due to jumps in gas prices. The unforeseeable pandemic that began to unfold in 2020 has crippled operators’ bottom lines, who, per expert estimates, should recover from this shock in early-2023. Last year, The Las Vegas Sands incurred a loss of $2.1 billion, the same as Wynn Resorts. So, societal and health crises also dramatically affect this sector, whose stability rests at the whim of multiple factors.

What Are the Best Casino Stocks to Invest in Now?

The US is home to over 2,100 casinos. There are hundreds of operators on gaming establishments in North America, a decent mix of Native American tribes, private companies, and publicly traded entities. Most experienced investors advise laypeople to only buy stocks in massive corporations that can withstand long-term industry turmoil.

Currently, analysts suggest that the three best casino stocks options include Red Rock Resorts, MGM Resorts International, and Caesars Entertainment.

Red Rock Resorts is a Summerlin South company owned by Station Casinos. Its stock has soared this past year, notching a growth of 70% year to date. MGM is a brand virtually everyone that has ever had so much as a fleeting interest in casinos has heard. It owns twenty-nine gaming establishments, and its stocks have grown 35.7% year to date. Caesars Entertainment is another sector juggernaut that reported a net income of $548 million for Q1 of 2021. Its assets delivered a 130.9% return to shareholders in the past year.

How to Invest in Casino Stocks?

Individuals with deep pockets prefer to do so via hedge funds. Concerning Caesars Entertainment, seventy-six funds have invested up to $1.5 billion in this corporation. However, that option only gets reserved for only those who rank as institutional or accredited investors. These are people with at least one million dollars in the bank or an annual income of over $200,000. Thus, for average-income individuals, the best course of action is to find a reputable broker. Instruct that person to built-up an investment portfolio with gambling stocks.

Final Thought

Gambling stocks can fluctuate dramatically. Therefore, everyone should stick to massive industry entities that can weather storms that affect this sector. The three options discussed above are a decent starting point. Other ones worth exploring are Wynn Resorts and Boyd Gaming.

About the Author

Shelly Schiff has been working in the gambling industry since 2009, mainly on the digital side of things, employed by However, over her eleven-year career, Shelly has provided content for many other top interactive gaming websites. She knows all there is to know about slots and has in-depth knowledge of the most popular table games. Her golden retriever Garry occupies most of her leisure time. Though, when she can, she loves reading Jim Thompson-like crime novels.