Casino stocks are down! How inflation and economic fears are taking a toll

Casino stocks are down!

/ 15 min

Gambling stocks have fallen off a cliff in the past year, as inflation makes people more prone to sell their assets for liquidity.

What’s the best course of action in a crisis like this? Learn from our in-depth 2022 casino stocks guide!

What Major Casino Stocks Are Affected by Inflation?

Gambling stocks Stock indicator Price Q1 Price Q2
Caesars Entertainment NASDAQ: CZR $86 $39.65
Bally’s BALY: NYSE $36.25 $18.61
Penn National Gaming NASDAQ: PENN $50.82 $27.4
MGM Resorts MGM: NYSE $43.73 $27.95
Golden Entertainment NASDAQ: GDEN $54.85 $41.3
Red Rock Resorts NASDAQ: RRR $50.28 $33.05
Hilton Grand Vacations HGV: NYSE $51.86 $43.5

Disclaimer

We hold an advantageous long position in MO shares via stock ownership, options, or other derivatives. This article was written based on our research, and it contains our own opinions. We receive no compensation from any of the presented companies. In addition, we have no business ties to any of the companies whose stock is mentioned in this article.

Why are Casino Stock Prices Falling?

Why are casino stock prices falling

Casino stocks have underperformed mainly due to the current inflation and fears of a global recession. Naturally, in such a tense economic atmosphere, people tend to spend less at the casino table and ponder more about the unknown future.

The gambling sector is susceptible to periods of social and economic turmoil.

Definition

Gambling companies are said to be part of the consumer discretionary sector, as they ‘trade’ entertainment, a nonessential service.

Prices for consumer discretionary stocks will drop during tough times but most likely return to the expected values when all is well again economically.

Where to Find Accurate Financial Info

Forecast service Reliability rating Best feature Drawbacks
Nasdaq 5/5 Real-time updates Not all companies are NASDAQ-listed
Wall Street Journal 5/5 In-depth analysis by renowned experts Too complex for beginner traders
Financial Times 5/5 Unbiased, detailed reports You have to be an expert to read some of their content
Bloomberg 5/5 Fast, accurate delivery of market info from 1500+ sources Costly for the average user
London Stock Exchange 5/5 Real-time updates Not all companies are LSE-listed
Tipranks 5/5 Advanced data-driven research tools High price for full membership
Yahoo Finance 4/5 Unlimited watchlists Old-school website
Marketwatch 4/5 Virtual stock exchange simulator Some features are only for subscribers
Simply Wall St 4/5 Optimized design with graphs and tables, 7-day premium trial You may not find the company you need to know about
Motley Fool 4/5 Great stock picks for new traders Expensive to get access to all the features
Gov Capital 4/5 AI-driven forecast features, $1 trial Too many ads if you’re not registered
CNN Money 3/5 Intuitive forecast display Not entirely accurate

Know that you don’t know

No matter how many forecast services you will turn to, you should keep in mind that market movements are dictated mainly by social hype.

A reason behind stocks’ volatility can be the volatile public response itself. Look at Tesla’s stock price fluctuation during the past 2 years. You’ll see abrupt price changes that often correlate with outrageous news featuring Elon Musk.

Be aware

Past stock prices in currencies other than the USD were converted to today’s exchange rates.

Disclaimer

We’re not affiliated with any financial forecast services we link throughout this article. Stock prices in our tables reflect the situation at the time of writing, as posted on these websites.

Be aware that prices are subject to market fluctuations.

Gambling Stock Prices Projection for the Next 12 Months

Price target at CZR BALY PENN MGM GDEN RRR HGV
Yahoo Finance $106.43 $43.43 $54.16 $53.52 $66 $53.33 $71.75
Nasdaq $108.36 $40.67 $52.43 $50.25 $62.5 $55.83 $69.5
Tipranks $108.36 $40.67 $52.43 $50.25 $62.5 $55.83 $74
Wall Street Journal $103.27 $41 $56.56 $53.48 $66.33 $54 $71.75
Marketwatch $105 $38 $56 $52.5 $67.5 $54.5 $69.5

Be aware

We didn’t include all the consulted forecast services in this table because they offer similar price targets.

Important

Our table shows the average price targets for 7 major gambling companies primarily operating land-based venues, hotels and resorts.

You shouldn’t take these as absolute values. The actual price in 2023 might go either way.

Online Gambling Companies Stock Prices for 2022

Company Stock Indicator Price Q1 Price Q2
888 Holdings PLC 888.L $2.28 $2.19
Flutter Entertainment PLC PDYPY/LSE:FLTR $57.40 $51.58
DraftKings Inc. DKNG $23.52 $11.42
Aspire Global PLC ASPIRE.ST $108.6 $86.3
Entain PLC ENT.L $1.6 $1.46
Evolution Gaming Group AB EVO.ST $109.01 $91.09
Playtech PLC PTEC.L $7.3 $6.77
International Game Technology PLC NYSE:IGT $28.45 $18.77

How did online gambling companies fare in 2022?

  • We can see that online gambling operators were also affected by this year’s events
  • However, online gambling companies seem to have performed better, so their stock price dropped at a slower rate compared to offline operators
  • In our view, this is due to the sensibly higher cost of a land-casino visit
  • You’d need more cash for a trip to an MGM resort than for a session at one of the top online casinos UK
  • That’s why 2020 was a horrible year for casino resort operators, while online gambling companies didn’t suffer that much

Tips

Suppose we collate this data with our internal performance audits. In that case, we can single out 888 Holdings and Entain as our top recommendations. The two companies launch new casino sites constantly, and the casinos are competitive enough to survive and thrive in the market.

Online Gambling Stocks’ Price Targets for 2023

  • 888 – $5.88
  • FLTR – $177.75
  • DKNG – $27.72
  • ASPIRE – N/A
  • ENT – $22.61
  • EVO – $159.78
  • PTEC – $8.34
  • IGT – $35.21

Notice

We took the price targets from the Wall Street Journal magazine. Be aware that prices fluctuate and might look different when you read this article.

Fact Check: The Gambling Stock Market Hit Rock Bottom

Fact Check The Gambling Stock Market Hit Rock Bottom

  • Gambling stock prices have reached unprecedented lows this quarter
  • Prices are dropping as inflation wreaks havoc on the global economy
  • Both online and offline operators suffer significant losses since money is worth less
  • All signs seem to point toward the market hitting rock bottom
  • Two opposing but equally wrong views stem from this situation
  • Some believe the sharp decline means gambling stocks are down for good and therefore decide to sell
  • Others see it as a God-sent opportunity to buy at a low price and profit later

Online and offline gambling companies are affected differently

It might be a good idea to account for these differences if you’re an investor. Assessing your properties’ volatility is the best way to navigate these uncertain times.

What’s the three-day rule in stocks?

The three-day rule states that, following a significant shift in price, an investor should wait at least 3 days before buying.

Gambling + Stocks + Inflation = A Tricky Combination

Gambling + Stocks + Inflation = A Tricky Combination

The events of 2020 marked a decisive shift in the casino industry’s revenue influx. Now, an equally transformative context seems to have emerged: inflation.

Naturally, stock prices decrease during such periods, but not all companies will perform the same.

Important

Inflation correlates with a rise in production costs and an increased price for the end products or services.

When demand exceeds the offer, customers will be willing to pay more for the same thing. Rising interest rates can lead to a market crash, even more so when they combine with tense political factors.

Land-based gambling stocks performance in 2020

Land-based gambling stocks performance in 2020

  • The top 4 land-focused casino stocks had to suffer some losses during the first two quarters of 2020
  • Penn National Gaming effectively navigated the crisis, suffering minimal losses
  • Despite MGM’s graph line looking relatively steady, the company’s earnings reached an all-time low when land-based casinos were forced to close
  • The situation stabilized as emergency regulations were loosened, and all companies registered exponential growth toward the end of the year

Be aware

Suppose you acquire an asset at a lower price. In that case, your capital is at risk because you don’t know when the prices will go up. Make sure you can handle some losses at the beginning.

Forecast for the top land-casino stocks

  • PENN is still held high by financial experts, who regard it as undervalued
  • The same goes for BALY stocks, for which Wall Street experts share a strong consensus
  • CZR share price went off a cliff during this quarter but looks likely to make a return in the coming months
  • The owner of the prestigious Bellagio, MGM Grand and multiple other operations in Macau will expand in the later 2020s
  • That means the MGM stock price will go up, a fact further proven by MGM’s deals in Dubai and Japan. MGM also looks to grow in the online realm with its sports betting app
  • Overall, gambling companies’ revenues and, therefore, share prices will stabilize during the later part of 2022 and 2023

TIps

Suppose you’re going to invest in MGM stocks. In that case, Wall Street analysts advise you to wait until the company has returned to profitability.

Best performing online gambling companies in 2020

Best performing online gambling companies in 2020

Important

As the graph shows, Flutter Entertainment (LSE: FLTR) was the least affected online gambling company during the 2020 crisis. The company has enjoyed smooth sailing with its best-performing UK slots sites, including Paddy Power and Betfair.

  • In Q3 2020, IGT stock prices dropped, but that’s not surprising. The company is specialized in casino software solutions, and during that time, they probably didn’t have so many new casinos to sell their software to
  • Entain and Draftkings stocks were relatively stable throughout the year
  • A combination of stimulus money, the temporary closing of land-based casinos and other socio-economic measures kept the online gambling industry afloat
  • The notable differences in share value cannot be attributed to financial performance alone
  • For instance, Flutter Entertainment’s high stock price may be related to its proportionately high revenues
  • Nonetheless, despite these differences, we can notice an upward trend
  • So, it’s safe to say that the 2020 crisis didn’t have such a dramatic impact on iGaming companies

What does it mean to sell the rip?

Selling the rip is when investors decide to sell an asset that has declined sharply. It can help cut losses when stocks are underperforming.

Tips

Sometimes a stock’s abrupt decline is followed by explosive growth. It’s vital to base your investment decisions on real-world research and not on crunching numbers alone.

Forecasted price targets for online gambling stocks

  • Inflation led to a depreciation of gambling stocks in Q2 of 2022
  • FLTR and ENT shares also dropped due to upcoming UK gambling regulations
  • But it’s not a paradox that most analysts bet on the stocks rising again next year

Gambling during the inflation

It’s a fact that inflation correlates with less spending on entertainment. Still, in times of economic restraint, people may see gambling not as entertainment but as a way to make money.

Our responsible gambling principles strongly advise against this. However, we’re aware such player attitudes can bring significant revenue, preventing the industry’s absolute crash.

Casino Stocks Take a Hit, but the Market Won’t Crash

Casino Stocks Take a Hit, but the Market Won’t Crash

It’s important to remember that no crisis lasts forever. The market is cyclical, so you have reasons to trust that entertainment stocks, particularly gambling stocks, will not crash indefinitely.

Look back in history to navigate a stock market crash

Investors should look at the recent financial crises of 2001, 2008 and 2020 to understand how to proceed now.

To prepare for a market crash you need to

  • Diversify your asset portfolio and balance gambling stock with other types of assets
  • Be ready to buy when prices drop, and
  • Have a long-term plan instead of panic selling when things don’t go your way

Are casino stock prices down for good?

Are casino stock prices down for good

Once the global economy returns to normal, gambling share prices should reach pre-2022 levels as well. After each significant crisis, the market tends to stabilize. The question now becomes how long will the current inflation last.

Technically, if the patterns of the previous crises remain, you could recover much of your losses in less than one year. Therefore, panic selling is most inadvisable.

Should you buy the dip?

When prices reach unprecedented lows, buying is generally a good idea. Still, there’s no way for an investor to determine the perfect time to try and beat the market.

Undervalued Gambling Stocks List

Undervalued stocks Current Price Buy rating Forecast by
Penn National Gaming $28.21 Strong Buy Wall Street Journal
Bally’s Corp $18.01 Moderate Buy Tipranks
IGT $18.48 Strong Buy Tipranks
Flutter Entertainment $110 Moderate Buy Yahoo! Finance
888 Holdings $2.09 Strong Buy Simply Wall St

What are undervalued stocks?

A stock is deemed undervalued when its listed price is perceived to be erroneous. Undervalued stocks are listed at a much lower price than the market, creating a value-bet-type opportunity.

That’s why undervalued stocks hold the highest potential for investors who are patient enough to wait for long-term bargains.

Why Casino Stocks’ Low Price Can Be A Blessing in Disguise

Why Casino Stocks’ Low Price Can Be A Blessing in Disguise

  • You shouldn’t rush into buying casino stocks just because the price seems too good
  • Cheaper stocks are affordable, but it’s not only the price that dictates profitability
  • A low-priced casino stock is only valuable if the price/earnings per share (PE) ratio is low
  • In other words, you want to pay less but for an asset that can potentially yield more
  • With lower PE stocks, you can earn more over longer periods
  • Make sure you always back up your investment decisions with a real questioning of the market average
  • Look at other metrics that show the company’s profitability, for instance, sales, revenues, net worth and earnings per share

Best Casino Stocks to Buy in 2022

Gambling Company Stock Indicator Current Price Price/Earnings Ratio Predicted Growth Volatility
888 Holdings LSE:888 $1.94 14x 4.7% High
IGT NYSE:IGT $19.01 8.2x 39.8% Average
Penn National Gaming NASDAQ:PENN $28.51 12.44x 41.9% Average
Flutter Entertainment PDYPY $103.38 247.7x 15% Low

Why invest in these stocks?

Despite the high volatility, we believe 888 Holdings shares are a good option. Since the price is so low, you could technically turn volatility into an advantage if stock value spikes up in the future.

If you want to play it the safest, you should opt for stocks in Flutter Entertainment. They are pricey but have registered the slightest fluctuations during the past two years.

What stock do you think is best?

Tell us your opinion by leaving a comment in the section below.

F.A.Q

What is the best casino stock to buy right now?

PENN is undervalued, making it the best option to invest in right now. 888 is the cheapest option, while Flutter Entertainment stocks seem to be your safest bet.

Is there any similarity between gambling and investing in the stock market?

You could say that gambling and stocks are similar in the sense that both require you to speculate about the future and place a bet, hoping your hunch turns out to be correct.

What causes inflation?

Inflation occurs when the demand for a product or service exceeds the offer. Numerous factors can contribute to this, including population growth, increases in public spending or artificially increasing the monetary supply.

How does inflation affect the gambling industry?

During periods of inflation, gambling companies’ revenues may drop because people have less money to spend on entertainment.

Has the casino stock market hit rock bottom?

Although it may seem like gambling stocks are at their lowest point in years, it’s too much to say that the market is down for good. The gambling industry is virtually recession-proof because even in times of crisis, people tend to bail themselves out with the promise of a lottery or jackpot win.

When should you buy the dip?

There’s no scientific method to determine the right moment to buy stocks. Still, you should keep an eye on two things: stock prices should drop abruptly and you should be confident that they will rise again.

When should you sell the rip?

You can never know for certain when it’s the right time to sell, but you can educate your guess. Shorting supplies is surely the way to go if your stock crashes and you feel its price is going to drop indefinitely. 

Which are the top casino stocks with a "Strong Buy" analyst rating?

Based on our research, the best casino stocks to invest right now are PENN and IGT.

Is it best to buy undervalued stocks?

Yes. Undervalued stocks can yield you more over the long term.

What’s better, a high or low price-to-earnings ratio?

If you want to check whether a stock is undervalued or overvalued, you must check the price-to-earnings. Most times, a lower than average P/E ratio means that you pay less for a stock that can grant you better returns.

Is MGM a good stock to buy right now?

Our research shows that analysts are split regarding MGM stocks. However, most agree that you should exercise caution and wait for the company to return to profitability first.

Are BALY stocks a good buy?

The current consensus is that you should buy BALY stocks. Make sure you follow a trusted forecast service to be the first to know if the company becomes underperforming.
Cosmin Brehoi
Author Cosmin Brehoi Author & Editor at CasinoAlpha
Tudor Turiceanu
Author Tudor Turiceanu CEO & Chief Editor at CasinoAlpha

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