Sunday, December 08, 2013

Will Legalized Online Gambling Help the Casino Stocks?

Two days before Thanksgiving, online Internet casinos opened in New Jersey, becoming the third state, in addition to Nevada and Delaware, to legalize online gaming. ('Gaming' in this article refers to gambling, not computer games.) Investors are wondering if this will help or hurt the terra firma casinos.

The Online Gambling Supporters

According to recent Bloomberg interviews, MGM Resorts International (MGM) is definitely going after online poker. Caesars Entertainment (CZR) is also a champion for online casinos.

MGM Borgata

MGM's Borgata casino in New Jersey is one of the first six casinos that received approval to offer Internet gambling. The company also owns resorts in Nevada, Michigan, and Mississippi, along with the MGM Macau Resort. The stock trades at 92 times forward earnings but generated negative earnings for the latest quarter on a 9.4% rise in revenues.

Caesars Entertainment

Caesars Entertainment is the largest casino company in the country, and owns Caesars Atlantic City in New Jersey.  It is also ne of the leaders in online gambling as it has Internet casino games in the United Kingdom, France, and Italy. Caesars has also generated negative quarterly earnings, and had a 3% drop in revenues.

Will Wynn Win?

One of the casino companies that is holding back on online gaming for now, and appears to be in better shape from a financial standpoint is Wynn Resorts (WYNN). Wynn trades at 28 times trailing earnings, 23 times forward earnings, and reported a stupendous jump of 62.5% in earnings for the quarter on a 7.1% boost in revenues. The stock even sports a decent yield of 2.5%.

Other Casino Stocks

If you want to gamble on gambling related stocks, there are over a dozen to choose from. You can get a free list of casino stocks at, which shows the PE ratio, the forward PE, the PEG, the yield, and the locations of operations.

Disclosure: Author didn't own any of the above at the time the article was written.



12BET said...

I've read about Borgata and I've learned that they had a good start on their first month. They said that this is not a competition for their land-based business but instead it is a complementary. :)

Stockerblog said...

It's great news for Borgata. It will be interesting to see what the revenue breakdown will be for this year.