While we all might enjoy a spin of the roulette wheel every now and again, it’s a heck of a lot different when it comes to investing your money in the casino industry rather than a pot luck chance of winning on a game.
Over the last decade, the casino industry has hit lofty heights in terms of revenue, worth over $500billion worldwide, with online casino sites among the most popular pastime for people and casino software companies among the most technologically advanced when it comes to the gaming industry.
That’s making the casino industry a worthwhile investment. Well, if you back the right stocks that is.
Deciding to invest in any particular industry can be difficult, and casinos are no exception. That’s why we’ve put together this handy guide to help you if you’re looking to back the casino for the first time…
Where within the industry are you backing?
When it comes to where to put your money, you can back different areas of the casino industry, which can be broken down as follows:
- The suppliers: The software companies that make the casino games
- The Casinos: The casino brands that house the games. These can be both online and offline
- REITs: This is a company which owns the land that casinos operate on.
The suppliers often provide the best opportunities for investment as for casinos themselves its a saturated and incredibly competitive market. While there are brands that dominate the market, the advancement in technology has helped many other brands come to the fore with unique products that look to move the casino industry forward, integrating the likes of AR and VR for a more immersive experience.
How do regional dynamics change the demand
You also need to understand how the companies you’re looking at may see stock prices change depending on their surrounding region. In the USA this has a big part to play as legislation and regulation is continuing to change that could have an impact on the demand in certain states, and ultimately push down the price of your stocks.
A good example of this is the impact a crackdown on corruption and money laundering in China had on Macau’s stocks, as it led to fewer VIPs entering Macau to play and caused a downturn in the revenue within the special administrative region.
Regulators play a big part in casino investments
Casinos are heavily regulated and those in power of those regulations can dictate how well a stock does. If you’re investing in a casino brand that is looking to expand around the world, you may see a drop in share prices if the brand fails to gain a licence in a particular region, such as Japan or other parts of Asia where the expansion of gambling outlets is lucrative.
For example, Las Vegas Sands’ huge success came from winning particular licences in Macau and Singapore, while Caesars saw a drop after failing to win a concession in Asia.
Do your research around this and listen to experts within the field on what they believe may happen.
Keep an eye on the competition
As we’ve mentioned, new, innovative brands can come out of nowhere with new technology that can transform particular casino games. This is certainly the case when it comes to casino game suppliers and while it’s unlikely the big players will be pushed out of position, smaller ones you’ve backed may take their eye off the ball for one moment and be left behind.
Like any investment, you need to continually monitor the landscape and adapt accordingly.
Disclaimer: This content does not necessarily represent the views of IWB.