Two to Bet On
Despite all the noise and news, and with the exception of companies entering the unpredictable predictions market, gaming stocks are in a less-than-exhilarating period.
Land-based casinos soldier on. Online operators say they’re getting promotional expenses under control while spending on what they euphemistically call “customer investment.” And many suppliers continue to adjust to their structural changes. Investors have few exciting growth stories to choose from.
But two come to mind: Super Group and Bally’s.
DID YOU SAY SUPER?
Investors are accustomed to giving sky-high valuations to online sports betting and iCasino operators on the promise that someday they’ll be profitable, even on a GAAP basis. Someday.
Yet Super Group is an NYSE-listed iGamer that’s growing earnings and revenues more than 20 percent a year. It has more than $400 million in cash on its books and even pays a quarterly cash dividend. Its stock price is less than 14 times next year’s analyst consensus earnings per share.
It gets better. SGHG recently paid a special dividend in addition to its quarterly payout. Let me repeat: there’s an iGaming operator that pays a dividend.
Super Group has no current U.S. operations. Its Betway sports betting and Spin iCasino operate nearby in Donald Trump’s 51st state, Canada. But most of its operations are in the U.K. and elsewhere, including Africa.
Never a high-priced stock, Super Group has really come down since autumn, when the U.K. approved big online tax increases. Citizens Bank analyst Jordan Bender calculated the higher tax would cost Super Group 1.46 percent of GAAP profits, and the stock sank more than 30 percent.
To put it in perspective, Super Group’s market cap is around $5 billion, about 20 percent higher than Rush Street Interactive. But its 2025 estimated EBITDA is around five times RSI’s. That’s more than DraftKings is expected to report for 2025. Even if DraftKings doubles EBITDA in 2026 and Super Group doesn’t grow at all, its market cap comparison would make it four times more efficient.
We make no prediction as to how Super Group will perform in 2026, but in its 2025 earnings pre-announcement the company said trends are strong, and the special dividend of 25 cents a share is tangible evidence of its confidence.
ABOUT BALLY’S
Suppose you had a casino company with 20 casinos internationally, including a network of U.S. properties and an online gaming operation with sports betting in 13 states, for more than $700 million a year in EBITDA. Plus, the company has:
• The right to build the only casino resort in Chicago, a $1.7 billion property opening this year;
• The right to be one of only three casino operators in New York City, planning a $4 billion property there;
• The right to build a casino resort adjacent to a Major League Baseball stadium on the Vegas Strip;
• 58 percent ownership of international lottery and iGaming company Intralot, which generates more than $400 million a year in EBITDA and growing;
• A 37.7 percent stake in Australia’s Star Entertainment, with a market cap over A$1 billion, which is thought to grossly underperform its potential; and,
• The possible purchase of once profitable London-listed online betting company Evoke, considered to be worth several times its current value if effectively managed.
With a current market cap of just $750 million, you have Bally’s Corp.
Let’s use a back-of-the-envelope example of Bally’s potential. If the New York, Chicago and Las Vegas projects generate 20 percent EBITDA on development costs, that would total $1.6 billion, more than twice Bally’s current profitability. And for projects of those size, returns above 20 percent are likely.
If Bally’s continues to grow its legacy U.S. brick-and-mortar businesses, grows iGaming and sports betting at the industry’s pace, and fulfills the potential of Intralot, Star and perhaps Evoke, its potential isn’t big. It’s gargantuan.
Bally’s also has an interesting ownership: hedge fund founder and operator Soo Kim. As previously noted, the much-bemoaned loss of Las Vegas mojo is in part because the visionary founders are gone, leaving Wall Street guys in charge. It’s a natural maturation common to all industries.
In Bally’s case, Kim, the visionary leader, is a Wall Street guy, so maybe the company can dip into both wells of knowledge.
It won’t be simple or easy. Growth will require debt. The financial structure is complicated. Bally’s, once the owner of racinos in Rhode Island, becomes not a conglomerate but an agglomeration of different businesses in different jurisdictions in different parts of the world.
The risks—financial, regulatory, cultural and in execution—are many. But if Bally’s keeps growing its legacy businesses and the rest of it is a wash, investors will profit nicely. If one or two of the big initiatives is a home run, the return potential is several-fold. And if they all fall into place, well, move over Steve Wynn, Kirk Kerkorian and Sheldon Adelson—there’s a new legend in town.
