1. Penn National Gaming
After the acquisition of theScore, Penn looks far more enticing than its 2021 stock performance would indicate.
Year to date, shares of Penn have shed 17% of their value. After hitting a high of $142 in early March, they've steadily declined to $71.84 today.
But Penn's long-term growth prospects are too intriguing to ignore.
Its multiple gaming and horse racing properties should provide more value once customers feel fully comfortable returning to them in person. Moreover, the company's 36% stake in digital media company Barstool Sports — 66 million monthly users and counting — exposes Penn to Barstool’s multiple revenue streams, including sports betting pay-per-view events and advertising.
And then there’s Penn’s acquisition of TheScore, which, according to a joint press release from the two companies, will create “North America’s leading digital sports content, gaming and technology company.”
"In the near term, we'll just be scratching the surface of where we can ultimately take this company," Penn National CEO Jay Snowden said during a call with analysts on Thursday.
DraftKings is one of America’s largest fantasy sports and sports betting operators, putting it in a prime position to capitalize on the rising popularity of online wagering.
It’s been a somewhat rocky year for DK’s stock, which hit all-time highs of $74 in March only to get walloped in the months since. The stock closed Friday at a price $51.59 per share.
Recent moves should solidify DraftKings prominence in the sports betting space moving forward.
In March, DraftKings acquired Vegas Stats and Information Network, a media company dedicated to sports betting. In April, DK became an official sports betting partner of the National Football League. A partnership with Major League Baseball, signed in May, allows users of the DK app to watch live streaming of MLB games.
The added exposure appears to be paying off.
DraftKings posted revenue of $312 million in the first quarter of 2021, a year-over-year increase of 253%, according to the company’s Q1 financial results.
3. MGM Resorts International
If MGM was only a casino operator, the last year and change of COVID-19 restrictions might've crushed its financials along with its stock price.
But the company’s BetMGM gaming site, which offers mobile sports betting, poker, and casino games in 11 states, as well as the partnerships it’s made over the last few years, have kept its stock price afloat — and then some.
In September of 2020, MGM made a major splash with the NFL, with BetMGM becoming one of the Detroit Lions’ official sports betting partners. That same month, MGM became the Las Vegas Raiders' official sports betting partner in a joint venture with GVC Holdings (now known as Entain).
MGM has also struck up partnerships with Major League Baseball, the National Basketball Association, and the National Hockey League.
MGM’s second-quarter earnings call this past Wednesday points to bright days ahead for the company’s sports betting arm. BetMGM’s revenue increased to $45.9 million in Q2 2021 from $5.2 million in the year-ago period.
“BetMGM remains a clear leader in iGaming, having reached a 30% market share in the second quarter,” MGM CEO Bill Hornbuckle said during the call. “We also continue to see the benefits of customer acquisition between MGM and BetMGM.”
MGM shares are up 26% year to date.
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The future of the sports betting space
The combination of technology, a desire for easy money and the human obsession with predicting the future should translate into long-term growth for the sports betting space.
In 2020, a year when millions of Americans saw their incomes decimated, over $21.5 billion were wagered on sports, according to analysis from Sports Betting Dime. That’s almost five times the amount bet in 2018. The gross, post-payout revenue generated by sports betting companies grew from just under $328 million in 2018 to $1.5 billion in 2020.
As more states open themselves to sports betting — it’s legal and operational in 20 states — those revenues are expected to surge. Research by Gabelli Securities and the US Census Bureau estimates US sports betting revenues will top $10 billion a year by 2028.
Just as you would when putting together a complicated, multi-bet parlay, be sure to do your research before trying your luck with any of the companies mentioned here. There’s a lot of potential in the sports betting space, but you want to invest in it, not gamble on it.
Alternative investing ideas
If the future of sports gambling isn't something you want to invest in, there are other ways to participate in the market.
If you’re looking for diversification at a price you can afford, consider downloading a wildly popular app that allows you to invest in a diversified portfolio of stocks using little more than the “spare change” left over from your everyday purchases.
And if you have a larger pot of capital to draw from, you might want to consider sinking some of it into farmland.
Farmland is a proven hedge against high inflation, and with the global demand for food expected to surge in the next 20-30 years, farmland can provide dual returns through rising food and real estate prices.
Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.