If It Ain’t Broke…
Who are the best performers among gaming companies? Those that stick to a tried-and-true vision. And extra points for those with founders at the helm.
With the stock market’s unpredictable near term, a fair question to ask is which companies perform best over a period of time that is long enough for short-term and one-time phenomena to even out.
Let’s take five years for discussion’s sake. It’s long enough to have absorbed unpredictable and ephemeral events, but short enough for most investors to see the end of the tunnel.
Focusing on U.S.-listed companies, here is the stock that provided the best price appreciation from August 1, 2021 through August 3, 2026.
And the winner is, of course, a king: Monarch Casino, up 121.4 percent during that time.
Unfortunately, gamers as a whole underperformed—and in many cases woefully underperformed—the overall market.
If we use the S&P 500 as the standard, only five companies passed the test beating the S&P’s 40.5 percent advance:
Monarch 121.4 percent
Rush Street Interactive 89.2 percent
Red Rock Resorts 73.4 percent
SuperGroup 47.2 percent
Boyd Gaming 44.8 percent
This doesn’t include dividends (all the above except Rush Street pay one).
The best dividend payer among U.S. stocks listed during that time has been Gaming & Leisure Properties. Its stock advanced 24.9 percent during the period and its dividend yielded anywhere from 6 percent to 7.5 percent depending on the stock price at any one time, and it was raised every year. It yields 7.4 percent as of this writing.
In other words, on a total return basis, GLPI has been among the best performers.
Then there are the underperformers:
Century Casinos – 80.2 percent
Penn Entertainment – 75.4 percent
Full House Resorts – 73.3 percent
Caesars Entertainment – 70.7 percent
Genius Sports – 65.5 percent
DraftKings – 60.4 percent
If you’re wondering about the big glamour names, they have basically treaded water. MGM is up a paltry 4.5 percent, Las Vegas Sands a mere 1 percent, and Wynn dead even.
So, what do we make of these over- and underperformers?
The first and most obvious observation is that industry sector doesn’t matter. The top performers include regional casino operators and digital companies. The bottom six include, get this, regional casino operators and digital companies.
There is one distinction, however. The top performers all are controlled and run by founders for their families, or at least have big founding shareholders still on board.
The bottom five include some with that mix of ownership, but they mostly are run by non-founders.
In other words, the top performers have their original vision and stick to it. The bottom performers not so much. In fact, they’re all over the place. PENN, for example, has had not one but two disastrous dips into digital sports betting, all while Monarch, Red Rock and Boyd have shown the benefit of sticking to their regional brick-and-mortar knitting.
It also is noteworthy that Monarch and Red Rock own 100 percent of their real estate. If there has been a downright stupid scheme sold to casino investors it is the so-called opco/propco split. The idea that a company prospers by selling a tangible appreciating asset like its real estate and replaces it with a big new expense line called rent is the kind of financial manipulation that only a short-term trader can love. The enticement is real: get cash now to finance expansion debt-free. The reality is that the money is spent, the real asset gone and now there’s rent to pay.
On the flip side, there’s a reason landlord Gaming and Leisure Properties has been a good place for investors. It’s a reminder that investing isn’t about moralizing. It’s about making money, and if that’s by becoming a landlord that also earns money lending expansion money to its tenants, then let’s go.
DraftKings is another interesting story. CEO Jason Robins is always on TV speaking as though he’s running a winning company. DKNG has spent years—and huge amounts of money—on promotions to fight for market share in one of the worst euphemisms of the day: player reinvestment. Meanwhile, low-profile Rush Street just focuses on earning a profit.
So, what does the future hold?
We suspect the top performers will continue to do well as long as their ownership remains in place and they stick to their prudence and slow-and-steady-wins-the-race approaches.
We expect PENN will escape the underperformer category, as it has been chastened by its digital fiascos and now focuses again on its healthy and growing brick-and-mortar operations. Even in online sports betting, it now relies—as it should have previously—on its experienced and successful Score operation purchased several years ago.
Indeed, if we’re looking at companies to provide double-digit returns in the next several years, PENN is among them—assuming no more trips to dreamland.
Today’s headlines in the gaming space continue to be about the next great thing: prediction markets. Is it a threat or opportunity? An overblown phenomenon or truly the next big thing? It’s certainly a new chance for DraftKings to tout itself, but that’s another subject.
What we are confident about is that the next five years will be like the last five years. They will belong to the companies who know who they are, stick to that, and put prudence and execution first.
Frank Fantini is publisher emeritus of Fantini’s Gaming Report. Reach him at [email protected].
