Last month, in our introduction to the gaming sector and our review of the UK-listed companies in the sector, we highlighted that a key driver was how companies are positioned to benefit from the legalisation of online sports betting in the US; online sports betting is now legal in more than 30 states.
Another important dynamic is how reliant an operator is on the grindingly slow broadening of in-person casino or slot games across different states. Around 20 states now allow commercial gambling in land-based and riverboat casinos, ‘pari-mutuel’ racetrack betting (totalised betting like the UK’s Tote rather than fixed odds), and other in-person sports betting. This area of the industry still dominates the listed US gambling sector. Another 20 or so states also have casinos on tribal land, and overall there are still more tribal than commercial casinos across the US. There is limited scope for investors to participate in the tribal sector (there are a handful of joint ventures), and if anything this very distinct sector is something of an albatross for the commercial operators.
While UK-listed stocks have been able to cherry-pick their investments in the US to focus on online gaming and online sports betting, investment in US gambling stocks largely gives exposure to the far less dynamic casino and other in-person betting sectors.