The entertainment industry offers several unique propositions for investors. One often overlooked niche is the iGaming sector, which is concerned with online sportsbooks and casinos.
Online gambling is predicted to experience huge growth over the next few years. The Asia Pacific region is tipped for rapid expansion, and new trends are increasing the number of people in North America and Europe who are playing these games. Investing in gambling companies presents a unique set of opportunities. So, how do you begin to invest in iGaming stocks?
The Importance of Researching Regulation and Current Laws in Your Jurisdiction
The online gambling industry is set to experience a growth rate of 12.3%. This will turn it into a $186.58 billion industry by 2029. As well as sports books and casinos, there is a healthy third-party sector creating employment and further revenue. This includes websites like SBO.net, where you can rate and review the top online betting sites. Helping people find the best bonuses and game selection that is right for them, they are an integral part of the wide and lucrative iGaming sector.
Thus, it seems like investing is a no-brainer. The problem is that not all of this will come from an even spread, with some geographical locations experiencing massive growth and others stagnating. Thus, it is important to research the regulations and laws in the place you are investing.
For example, the US market has been in a period of rapid growth since 2018. This began when the Supreme Court struck down a federal ban on sports betting, making it a state-run affair. However, it now seems to be stabilizing. Only seven states allow online casino gambling, and that seems unlikely to change. Meanwhile, those that do allow sports betting are even contemplating restricting its use. These changes are dictated by laws, so they are worth researching.
Places that look more positive are Africa. Here, the growth rate is projected to be 2.07% in the run-up to 2029. Its mobile adoption rates are increasing, as is the security of its payment methods. With more countries changing their views and laws to accommodate online sports betting and casinos, the future looks bright. Thus, you need to know the laws and potential changes in the place you are investing.
The Most Popular Stocks
The top two stocks when it comes to gambling are Flutter (FLUT) and DraftKings (DKNG). Flutter is a global brand that operates in the US, Ireland, the UK, and Australia. While its name may not be familiar to bettors and gamblers, its properties will be. It owns FanDuel in the US, and SkyBet and Paddy Power elsewhere. Just one of these properties, FanDuel, has about 48% of the market share in the United States.
DraftKings only operates in the United States and Canada and is a purely digital affair. It has about 25% of the US market share for sportsbooks, and it has an online casino that is available in five of the seven states that have legalized them.
The Risks When Investing in Online Gambling Stocks
One of the main risks when investing in gambling stocks is market volatility. Gambling already has negative connotations, no matter how much its companies have tried to clean this up. Public opinion can change quickly based on a single news article.
This volatility can also be exacerbated by socio-political and macro-economic conditions, such as increases in taxation. When disposable income is low, people tend to spend less on entertainment like gambling, and this can also impact stocks.
Finally, the industry moves quickly. It has been at the forefront of many online innovations, such as cryptocurrency as a payment method and the introduction of live streaming games. Thus, it is imperative that any stocks that are invested in are watched to see if the company is staying up to date with trends and innovating.
First Time Investing in Gambling Stocks
While gambling stocks do offer the opportunity for great long-term growth, they remain volatile. Any purchase should come with diversification because of this. As an investor, you may wish to spread it across different niches. However, it is usually the case that if one firm drops in price, others do as well. Thus, you may want to consider diversifying outside the iGaming bubble.
Always research the market conditions and the company you are considering investing in. If they seem overvalued, then don’t go for them. Wait until the prices drop and choose your window wisely. You should then set a limit on loss-taking and profit-taking. No investment is guaranteed to prevail, so choose wisely.