PGasia | Revolution of Gambling: Sports Betting’s Impact and Slot Stocks Insights
In the past half-decade, the legalization of sports betting across nearly 48 US states ignited an unparalleled gambling boom in North America. With the US gambling market on a relentless rise, both gaming establishments and the manufacturers of software and equipment have enjoyed consistent growth.
The slot machine industry’s history has been marked by turmoil. In the 1980s, Bally Manufacturing, based in Chicago, held a monopoly on the slot manufacturing sector during the surge of legal casino gambling. As gambling gained wider acceptance, the market rapidly expanded, inviting new players armed with innovative video slot technology for games like blackjack and poker.
During this period, competitors like International Game Technology (IGT) and Japan’s Konami emerged as trailblazers. Over subsequent decades, mergers and acquisitions integrated renowned slot brands into global giants like Aristocrat Leisure, Scientific Games, and IGT.
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Shares of major global slot manufacturers such as IGT and Scientific Gaming have always experienced turbulence, driven by macro events, economic fluctuations, trade tensions, and the surge in competition from sports betting entities. Additionally, recent inflation-driven crashes hit several casino shares in the past year, recording levels unseen for over 40 years.
Moreover, apprehensions of impending recession have unsettled both customers and investors, leading to stock plummets. Encouragingly, casino stocks harbor substantial potential to yield value and excitement, rendering them increasingly attractive to investors.
However, it’s crucial to acknowledge that, like any stocks, gambling stocks are susceptible to value drops, a risk inherent to stock market investing. Broadly speaking, gambling stocks are classified as consumer discretionary stocks, inherently sensitive to economic cycles.
Due to their classification as consumer discretionary stocks, investor spending on betting and tourism aligns with the broader economic health. Whenever the gambling sector thrives, the same holds true for associated stocks.
In light of these dynamics, the pertinent question arises: which slot stocks stand out as the best performers in the market?
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Leading the Pack: International Game Technology (IGT)
Pioneering the domain of game development and manufacturing is none other than International Game Technology (IGT). With a remarkable US market share surpassing 70%, as reported by the American Game Association, IGT’s dominance remains unchallenged.
In the realm of consumer discretionary stocks, robust options abound. Among these, the discerning investor seeks out companies like IGT, consistently outperforming their peers. The past three months alone saw IGT’s earnings grow by 1.6%, amplifying analyst sentiment and the company’s overall outlook.
A notable stride for IGT involves its expansion in New Mexico’s gambling landscape, elevating its market presence. Through a multi-year collaboration with the Pueblo of Santa Ana Tribe, IGT gained entry into the New Mexico market.
Renowned for its iconic Wheel of Fortune slot machines, IGT also boasts a potent lottery business and promising prospects in sports betting and iGaming. Being one of the world’s largest lottery operators, IGT thrives on sustained demand, propelling its distinctive standing in the market.
PlayAGS: Beyond Electronic Gaming Machines
Emerging as a formidable player, PlayAGS has cemented its reputation as a premier electronic gaming machine manufacturer. However, the company’s influence extends beyond this, encompassing real-money gambling and the creation of card shuffling machines.
PlayAGS’ core operation revolves around deploying its machines across tribal casinos and cruise lines nationwide. Vigorously, over the past years, PlayAGS has made significant strides in penetrating global markets such as Mexico and Canada.
In April’s second week, PlayAGS stock concluded at $6.63 during the latest trading session, indicating a slight dip of -0.3%. Despite this, shares of this renowned gaming supplier have exhibited a 0.45% growth compared to the preceding month. As PlayAGS approaches its next earnings report, Wall Street anticipates a favorable performance.
Projections indicate PlayAGS is poised to report an estimated EPS of approximately -$0.08, reflecting a substantial boost of over 27% from the previous quarter. In terms of valuation, PlayAGS presents a forward P/E of 997.5, markedly contrasting with the industry average P/E of 23.7. This reality underscores that PlayAGS stocks have sustained a premium trading position for a sustained period.
Gamesys Group: Navigating Online Realms
Fronted by substantial online assets, Gamesys Group stands tall as a steadfast entity, consistently preserving the value of its stock with minimal price fluctuations. With its offerings in online betting software, Gamesys has recently garnered heightened profits and revenues in the first half of 2023 across US and Asian markets.
For the half-year ending in June, Gamesys Group reported robust adjusted earnings totaling £110.3 million, marking a notable 17% surge compared to the same period the previous year. The UK market witnessed a remarkable 20% revenue growth in the first half, attributed to the stellar performances of Rainbow Riches, Virgin Games, and Monopoly Casino.
However, beyond the US, Asia, and the UK, the panorama wasn’t as vibrant. In Europe, Gamesys revenue plummeted by 29%, a consequence of stringent regulations in Spain, Germany, and Scandinavia. Presently, Gamesys displays a clear focus on fostering innovation and elevating safer betting initiatives within its core markets.
Concluding Remarks
Shares of slot machine manufacturers often maintain a relatively moderate activity level. Nevertheless, a surge in casino footfall and heightened consumer expenditure on gambling has propelled these shares into the spotlight. The esteemed brands spotlighted earlier boast substantial industry recognition, bolstering investor confidence in their strategic choices.
