Americans love to gamble. A record 50 million people placed a wager on this year’s Super Bowl, spending $16 billion to gamble on the outcome of the big game, according to the American Gaming Association. The betting on the Super Bowl in 2023 represented a 61% increase from the previous year as online gambling platforms grow and proliferate, making it easier than ever for people to get in on the action. In June of this year, North Carolina and Vermont became the latest states in the United States to legalize sports gambling, bringing the total to 37.
Online betting has also been legalized nationally in neighboring Canada, adding to the growth of the industry. With more U.S. states expected to follow suit and make online betting legal, the market for gambling is forecasted to explode. Research and Markets is predicting that online gambling, particularly on sports, will surpass $150 billion a year by 2030. That’s a huge market and big opportunity for investors to get in on the action themselves. Here are three stocks to buy to benefit from the growing online gambling trend.
Shares of DraftKings (NASDAQ:DKNG) are trading like a tech stock lately. Year-to-date, DKNG stock has gained 187%. This brings its gains since its 2019 market debut to 223%. It’s been a stunning reversal for the online gambling and fantasy sports company, which suffered a big downturn in late 2021 and early 2022. The turnaround has come as DraftKings has grown its market share and revenue at a fast clip. In this year’s first quarter, the company reported an 84% year-over-year revenue increase to $770 million.
At the same time, DraftKings raised its revenue guidance for all of this year to a range of $3.13 billion to $3.23 billion from a previous estimate of $2.85 billion to $3.05 billion. DraftKings remains a leader in the fast-growing market for online gambling, which is forecast to nearly triple in size to $23 billion by 2030. Bank of America (NYSE:BAC) recently raised its outlook on DKNG stock, saying this year’s rally can continue. The bank placed a “buy” rating on DraftKings’ stock and said the shares could rally another 20%.
MGM Resorts (MGM)
Although it hasn’t had as big a rally as DraftKings this year, MGM Resorts’ (NYSE:MGM) stock is still performing admirably, having risen 50% since January of this year. Through 12 months, the company’s stock is now up 60%. Much of the growth can be attributed to the fact that MGM’s casinos and resorts are now fully reopened in places such as Las Vegas and Atlantic City after being forced to close or operate at reduced capacity during the pandemic. However, online gaming is a growing part of MGM’s business and helping to also lift the stock.
MGM Resorts online sports gambling division, called “BetMGM,” currently controls 30% of the total U.S. digital casino and online poker market. MGM has a 13% share of the U.S. sports betting market. BetMGM announced a 51% increase in its digital gaming operations during 2022, which has helped to boost the bottom line at MGM Resorts. The company has been aggressively marketing its BetMGM platform in the lead-up to this year’s NFL football season.
Caesars Entertainment (CZR)
The stock of Caesars Entertainment (NASDAQ:CZR) is also having a nice run this year, up 40% since January. The famous casino operator is, of course, benefitting from increased foot traffic at its Las Vegas resorts. However, the company also operates the hugely popular Caesars Sportsbook app that has been growing leaps and bounds in recent years. Caesars is also aligning itself more closely with the NFL, inking a deal to rename the famed New Orleans Superdome the “Caesars Superdome.”
Additionally, Caesars Entertainment has partnered with sports broadcaster ESPN and CBS Sports to be the exclusive odds provider for both of those networks, notably during the football season and Super Bowl. The Caesars Sportsbook app recently expanded to offer its online betting services in Canada and Puerto Rico as it continues to branch out in the industry. The company’s Q1 earnings print this year was exceptional, with Caesars reporting record earnings.
On the date of publication, Joel Baglole held a long position in BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.