Has the growth of online gaming affected gambling companies’ shares?

The recent online gaming boom shows no signs of slowing. Precipitated by technological advancements, online gaming is set to overtake its traditional/offline counterpart in the near future, in markets all over the world.

The proliferation of handheld smart devices and high-speed mobile internet has led to one of the most flourishing sectors in the entertainment industry. Nowhere is this more evident than in the gambling sector where many enthusiasts have access to hundreds of casino games online or via apps – allowing them to satisfy this modern leisure pursuit anytime, anywhere. This applies to many other gambling games that were traditionally played in casinos such as poker and bingo. Slots online are one of the most popular casino games with players having a variety of themed slots to choose from with a range of paylines.

Shares in the gambling industry have continued to reflect this upward trend. However, some of the best performers remain in the offline domain.

Golden Entertainment Inc. (GDEN)

The Enterprise, Nevada-based company is the largest slot operator in the state. Following the acquisition of American Casino & Entertainment Properties in 2017, they now operate 10 casino resorts, 9 of which are in Southern Nevada.

Golden Entertainment has a $1.5 billion market cap value with shares at $50.73 and a 12-month trailing P/E ratio of 13.1. The firm recorded a net income of $29.1 million in November of last year compared to a net loss of $7 million the previous year in the same quarter so the current price represents a great value stock.

Boyd Gaming Corp. (BYD)

Another gaming company from the Silver State, Boyd Gaming collectively runs a total area of 812,500 feet of casino floor space including over 20,000 slot machines across 8 different states. The firm announced it was having to lay off 25% of its workforce in 2020 to weather financial difficulties but is now listed as a gaming stock with some of the highest earnings-per-share growth.

888 Holdings PLC (888)

Commonly known as 888.com the Gibraltar-based online gaming provider has carved out a powerful presence in the market. 888 stocks are listed on the London Stock Exchange and are a constituent of the FTSE 250 index. The stocks have a price gain of -15.75% in 2022 year-to-date and a current price of GBX 253.60.

Forecasts suggest the bubble is not likely to burst anytime soon. As a growing number of services and society itself becomes increasingly connected and online, these sectors are likely to continue to prosper.

The casino industry has historically been a proactive and adaptive one, and the heralding of the online era doesn’t necessarily represent a bad omen for the brick-and-mortar casinos of the past. All of the large casino operators worldwide have been quick to adopt emerging technologies and all have a significant stake and representation in the online market.

However, in such a saturated and competitive sector, with a handful of powerful frontrunners, providers that fail to adapt to this demand fast enough are likely to get squeezed out or absorbed by the competition.

Trends show that the shares of gambling providers that perform the best have followed at least one of the following models:

• Focusing resources on the most profitable games in the sector – Presently, mobile slots represent one of the biggest growth sectors in the gaming industry, and investing in that area is a good way to prepare for the future.

• A solid basis for market analysis – Any business venture should have a solid understanding of the market in which they operate including any environmental peculiarities.

• Adapting to new trends – Emerging trends in the casino industry have included virtual reality (VR) and augmented reality (AR) which, although niche at present, are already being implemented by casino providers.

• Be an innovator – Innovating is an assured way to generate interest and new customs. Live casino—where live dealers are streamed from a studio—is an innovation developed by the industry as soon as the technology allowed. Live casino bridges the gap between the traditional and the online experience, offering the best of both worlds.

• Be a market leader – Innovation can lead to a brand becoming synonymous with emerging technology. Some companies have become so inseparable from their product that they have become household names. Examples of this include Jacuzzi, Kleenex, Xerox, Frisbee, Popsicle, and Google. Google actively tries to discourage people from using its name as a generic verb—“to Google”—because if it falls into the popular lexicon, they risk losing control of their trademark.

• Eliminate barriers between customers and the service – Consumers faced with lots of choices will gravitate to an easy-to-understand experience. In order to make service as smooth and stress-free as possible, a simple and logical user interface is key—which follows learned online behavioral norms and conventions.

Another possible sticking point is a provider that does not accept sufficient payment options. This might include PayPal and Venmo or even cryptocurrency. If these elements are not satisfactory, users will take their customs elsewhere.

A global move towards more relaxed gambling laws, not least the recent repeal of the PASPA act in the US, has given more room for gambling companies to operate. While this does also increase competition in the market, shares have continued to react favorably.

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