Penn National Gaming Poised for Growth on Sports Betting
In an effort to strengthen its foothold in the gaming industry, Penn National Gaming, Inc. PENN is banking on sports betting at various locations, following the legalization outside Nevada.
On Aug 17, the company opened sports betting at Hollywood Casino Gulf Coast as well as Boomtown Casino Biloxi. It will also offer sports betting at Hollywood Casino Tunica, 1st Jackpot Casino Tunica and Resorts Casino Tunica from Aug 24, and Hollywood Casino at Charles Town Races Sept 1 onwards.
Notably, in May 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) that banned sports betting outside Nevada. The court supported the legality of a 2014 New Jersey law, which allows sports betting at casinos as well as racetracks in the state. The decision also broke the Nevada's monopoly on the betting market.
Furthermore, the Court ruling opened door for other states to enter sports betting business. Per Eilers & Krejcik Gaming 2017 reports, legal sports betting market is likely to garner $6.03 billion in revenues annually by 2023. In fact, in a bid to legalize sports betting, nearly 20 states have introduced bills and many other states have started working on this matter.
We believe this Zacks Rank #2 (Buy) company that operates in jurisdictions like California, Florida, Illinois, Indiana, Kansas, Maine, Massachusetts, Mississippi, Missouri, New Jersey, Ohio, Pennsylvania, Texas, West Virginia and other states to gain the most from this ruling.
Consistent Strategic Efforts to Drive Stock Higher
In a year’s time, shares of Penn National Gaming have surged 62.7% compared with the industry’s 2% growth. Stocks such as Boyd Gaming Corporation BYD, Red Rock Resorts, Inc. RRR and Century Casinos, Inc. CNTY, which belong to the same industry, also gained 37.3%, 48.3% and 10.6%, respectively, in the same time period.
Penn National Gaming’s initiatives — involving revenue-boosting and cost saving initiatives — are expected to reap recurring benefits over the years.
Penn National Gaming’s acquisition strategies that help the company expand its presence as well as improve revenue yields are also encouraging. In 2017, the company entered into an agreement to acquire Pinnacle Entertainment, Inc. — a leading regional gaming operator. This transaction, which is expected to close in fourth-quarter 2018, is likely to add 11 more properties to the casino giant’s current properties.
Recently, it received approvals from the Massachusetts Gaming Commission (“MGC”) as well as the Texas Racing Commission (“TRC”) for the acquisition of Pinnacle Entertainment as well. The company expects to realize synergies worth $100 million from its Pinnacle acquisition.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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