The Tortoise or the Hare?
OK, time to bring out the clichés.
Two of our favorites, at least for this column: the next big thing, and slow and steady win the race. (Hint for those who don’t make it to the bottom of this irresistible column: slow and steady are winning the race.)
The next big thing is obvious. Just look at any newspaper, website, blog or social media post by the influencer of the moment.
In gaming, it’s predictions markets edging out AI (artificial intelligence) by a nose for attention. But let’s not forget online casino, which is in the money, though online sports betting looks increasingly like an also-ran.
Predictions markets are the craze du jour, though, in truth, there’s no predicting how they’ll fall out. It’s possible they’ll sweep aside more than 200 years of history, law and the supremacy of states’ rights in the United States and everyone from DraftKings to the latest get-rich-quick IPO that will jump on the wagon.
Then again, courts might put a quick end to the phenomenon by ruling that gambling is gambling, so out it goes for predictions markets except for hedging against commodities as originally intended. Outside of the U.S., whole countries are thinking of reining in or banning predictions market wagering.
Regardless, the common belief is that digital gaming, no matter the form, is fast winning out over fuddy-duddy casinos. After all, the convenience of gambling on your cellphone and the near impossibility of regulators to control fast-changing technology is a combination that the real-life surly blackjack dealer can’t beat. And if you want to get out of the house to gamble, there’s always a slot machine (or illegal or gray slot-like machine) at the corner bar or nearby fraternal organization.
…Ahh, But Here Comes That Tortoise
All of which is true, except that it might not be.
The greater truth may be that people remain social animals and want to associate with other people. And just as outdoor adventuring, ocean cruising and travel generally continue to thrive, enough people may decide they’d rather sit next to a fellow risk-taker at the card table or slap high fives with friends at the craps table when they choose to gamble.
And if you think the stock market is the ultimate predictor, then take a look.
The headlines for years have been made by companies offering investors the next big thing. Online gambling operators are still touting their futures, and some or many may end up winners, but the facts aren’t in the stock prices. As examples, the biggest of them, Flutter Entertainment and DraftKings, have lost two-thirds of their value from their highs.
Many investors have argued that the money to be made in digital gaming comes from the pick-and-shovel companies rather than the operators. For a long time, such believers touted the affiliates, which drive customers to the operators.
However, anyone who jumped on that next big thing got crushed. Better Collective, among the best of the affiliates, has lost more than half of its value since February 2024. Gambling.com Group, a sell-side analyst favorite just months ago, is down from $16.97 at its 2021 peak to $4.33 as of this writing. And Catena Media, which not too long ago talked about conquering the American online market, has lost more than 98 percent of its value since peaking in 2018.
Ah, but data, data uber alles, say advocates of Sportradar and Genius Sports. Everyone in the sports betting industry needs data, from Major League Baseball—which even took an equity stake in Sportradar—to sports betting operators themselves. And that argument is powerful, even though yielding to the urge to complicate their companies with various acquisitions does muddy their picture.
Still, alluring stories or not, the fact is a lot of investors have lost money on the pair. Genius Sports, at $6.19 as of this writing, is less than half of its 52-week high of $13.73 and just a quarter of its all-time high of $25.18 five years ago. Sportradar, at $18.98, is just over half it its all-time high of $32.22 achieved last year.
And The Winners Are…
So, what have been the best bets among gamers? Well, three very conventional tortoises: Red Rock Resorts, Boyd Gaming and Monarch Casino.
At around $61, Red Rock is near its all-time high. Likewise Boyd at $83 and Monarch at $98.
These companies are in the same business. They offer high-quality casinos to local and regional populations, pay dividends, own most of their real estate (all of it for Red Rock and Monarch) and have considerable stock ownership by the founding families.
By all means, an investor should put a few bucks into the next big thing. But don’t forget that gambling is a social form of risk-taking entertainment, and those offering human-to-human contact may have the most powerful draws.
Frank Fantini is principal at Fantini Advisors, investors and consultants with a focus on gaming.
