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Four Online Gambling Stocks to Consider

Valuewalk
·3 min read

At a time when the COVID-19 pandemic forced casinos across the country to close, online gambling companies have benefited dramatically because many people who would normally go to the casino to gamble are now doing so online. Even as casinos reopen, people will likely continue to gamble online. Here are four top online gambling stocks for those who want to tap into the trend.

Q3 2020 hedge fund letters, conferences and more

The Four Top Online Gambling Stocks

DraftKings (DKNG)

DraftKings is benefiting from the fact that it's both an online company and one that has had its initial public offering this year. Many new IPOs have been off and running out of the gate, and DraftKings is no different. The shares have pulled back a bit this month, but that could present an opportunity to buy the dip for those who like the long-term opportunity of the company.

DraftKings is one of the top names in sports betting, and the reason it has taken a hit is due to concerns about a fresh interruption for sports from the pandemic. The company also has its hands in casino gaming, which provides a bit of diversification at a time when sports betting is up in the air due to the pandemic.

Flutter Entertainment

Flutter Entertainment acquired FanDuel, one of DraftKings' biggest competitors and a well-known name in the world of sports betting, but that's not the only reason some can find to own the company's shares. Flutter has had a relatively easy ride upward this year since the March selloff, so now the key question is whether there is any more upside from current levels.

In addition to FanDuel, Flutter Entertainment also owns PokerStars, Sky Bet, Betfair and several other gambling brands, providing diversification. Although gambling is only legal in a handful of states, more and more states are starting to legalize it, which means there is plenty of room for growth for Flutter Entertainment.

Landcadia/ Golden Nugget Online Gaming

Golden Nugget Online Gaming went public through a reverse merger with Landcadia Holdings, a special purpose acquisition company, this year. It has had more of a bumpy ride than the first two stocks on this list, so that may give some investors pause. However, it is that very pullback that could suggest there could be more room for this stock to run in the near term.

Golden Nugget Online Gaming is actually a spinoff of the Golden Nugget brick-and-mortar casino business. The big question investors must answer in order to decide whether the recent correction is only temporary is how well Golden Nugget will do against DraftKings and FanDuel and whether the market is big enough for all three of them.

Scientific Games (SGMS)

This last online gambling stock is different than the other three because the company provides infrastructure to gambling companies. It isn't really a pure play online gambling stock because it also serves traditional casinos, but it does provide support to online gambling enterprises.

Those who are looking for a hybrid stock with exposure to both online and offline gambling might consider Scientific games. The shares have been moving steadily upward since the March selloff with a sudden jump in September. Perhaps one reason for the surge was the 113% increase in online gaming revenue in New Jersey, one of the biggest gambling markets in the country.

No matter which online gambling stock you choose, it's certainly a bit of a wager on whether the stock will continue to rise in the near term. However, those looking for a long-term play will surely find something to link in the universe of online gambling stocks.

Disclosure: None.