How Casino Stocks Continue to Showcase Growth
Posted by Harry Kane on Wednesday, June 28, 2017
Despite the ongoing spectre of Brexit, the UK stock market has recovered considerably in recent times to record impressive growth, with supermarket brand Tesco leading this charge.
The nation’s supermarkets are not the only stocks achieving growth, however, with casinos throughout the UK also providing a compelling value proposition for investors in the current climate. This has caused some surprise in the market, after gambling stocks cooled despite the sustained expansion of the sector as a whole.
In this article, we will look at casino stocks in the UK, and ask how they have begun to rise and benefit from increased demand.
Charting to Rise, Fall and Rise of Casino Stocks in the UK
Despite their obvious potential in a market as prosperous and as well-regulated as the UK, casino stocks have flattered to deceive in recent times. There are various factors that have caused this, including the emergence of the Millennial generation as the primary investors in the UK marketplace. This demographic is renowned for its socially responsible and ethical approach to investment, while Millennials also have an innate reluctance to place their money in so-called sin stocks.
The sustained and exponential growth of the UK market, both on and offline, has gradually altered the perception of Millennials and other investors who may have been initially loathe to commit to casino stocks. The Gambling Commission recently reported that the gambling sector achieved a cumulative value of £13.8 billion in the year ending September 2016, and this number will rise incrementally over time.
Although 33% of the market’s revenues of generated online, offline casinos have also grown too (particularly those that have incorporated technology into the experience that they offer).
Investors will also have been intrigued by the growth of the casino market overseas, with locations such as Macau overcoming recent compliance and regulatory issues to surpass revenue expectations. Las Vegas has also seen its casino industry benefit from regeneration, innovation and the proposed construction of new buildings, which in turn makes a more compelling argument for investors to seek out affiliated stocks.
While the level of sentiment in the UK (and international) casino market may be high and allowing investors to reap the rewards, the underlying business model is also appealing to those who are actively seeking stock options. After all, casinos are particularly lucrative and profitable entities, particularly online brands that have adopted a freemium business model. In total, UK casino brand operators won in excess of £1 billion last year, which in turn represented a 13.5% increase on 2015’s figures.
Why Casino Stocks Will Remain in Demand Among Investors
As we can see, UK casino brands and their stocks represent an extremely appealing in the current climate, even among the Millennial investors that have typically eschewed them.
With sustained growth, innovation and significant profit margins creating a buoyant industry, it is little wonder that investors wish to capitalise on this and claim their share of the overall dividend.
This trend is likely to continue for the foreseeable future, even against the back drop of Brexit negotiations. While the UK’s departure from the EU could eventually impact on the growth and appeal of casino brands, this has yet to be determined and may not become apparent for a number of years.