According to a report by The Business Research Company, the global gaming market reached a value of approximately $540.3 billion in 2023 and is expected to reach $744.8 billion in 2028, growing at a CAGR of 6.6%. This growth is expected to be supported by rising disposable incomes, political stability and increased foreign investment in emerging markets.
Lotteries were the largest segment of gambling, accounting for 53.9% of the total market. This segment is expected to grow at the fastest CAGR of 8.2% between 2023 and 2028 and is expected to generate $141.4 billion in global annual sales by 2028.
The online gaming market is rapidly gaining popularity. According to Research and Markets, the online gaming market is expected to reach $153.21 billion by 2029, growing at a CAGR of 10.44%. The widespread use of mobile phones, the Internet and convenient online payment gateways have made online gambling more accessible. The sports category is booming and is fueled by major sporting events.
In an interview with CNBC on November 8, Jason Robins, co-founder and CEO of DraftKings, shared his views on the current state of the online sports betting industry. He believes the industry is at a critical juncture, where more and more people across the country are realizing they can gamble legally, leading to significant growth. Robins attributes this growth to the increasing number of states that have legalized sports betting.
Robins also highlighted the vast potential for growth, highlighting the American Gaming Association’s projection of $35 billion in legal betting during the current NFL season, a 30% increase from last year . He hopes other states, including California, Florida and Texas, will soon follow suit and legalize sports betting. While acknowledging that the legislative process may be slow, Robins is confident that most states will eventually adopt some form of legal sports betting, paving the way for the industry as a whole to continue its upward trajectory.
As the global gambling market continues to grow at a rapid pace, driven by the growing popularity of online betting and legalization, it is clear that the industry is on the cusp of significant growth. With this in mind, let’s take a look at the 10 best gaming stocks to buy according to hedge funds.
Our methodology
To compile our list of the 10 best gambling stocks to buy according to hedge funds, we used Finviz and Yahoo stock filters to find the 25 largest companies in the casino and gambling industries. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks by the most hedge fund holders, as of Q3 2024. We also included the market capitalization of these companies as of December 3. The list is sorted in ascending order of hedge fund sentiment.
Why do we care what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Top 5 countries where sports betting is popular
A digital kiosk showcasing the diversity of sports betting options available.
Number of hedge fund holders: 69
Market capitalization as of December 3: $49.49 billion
Flutter Entertainment plc (NYSE: FLUT) is a global leader in sports betting and gaming. The company owns brands such as FanDuel, Paddy Power and PokerStars. Flutter Entertainment plc (NYSE: FLUT) serves millions of customers worldwide through its online gaming and retail platforms. In the third quarter, Flutter Entertainment plc (NYSE: FLUT) had 12.92 million average monthly users, representing a 16% increase from the same quarter a year ago.
Flutter Entertainment plc (NYSE:FLUT) has invested heavily in the US market, with FanDuel becoming a dominant force in sports betting. Additionally, the company also focuses on innovation, customer engagement and regulatory compliance to drive growth in established and emerging markets.
The US market remains a key growth engine for Flutter Entertainment plc (NYSE:FLUT). In the third quarter, the company’s U.S. revenue jumped 51%, driven by a 62% increase in sports betting revenue and a 46% increase in iGaming revenue. Internationally, Flutter Entertainment plc (NYSE: FLUT) continues to expand its footprint, with revenue growth of 17%, combined with an EBITDA increase of 29% in the UK & Ireland and solid growth in Australia. The company also plans to enter the markets of Alberta, Canada and Missouri, USA in 2025 to exploit new opportunities and increase its market presence. Looking ahead, Flutter Entertainment plc’s (NYSE: FLUT) forecast for 2024 reflects confidence in its growth strategy, with expected revenue of $6.15 billion in the U.S. and $8.2 billion dollars for its group outside the American markets.
Global FLUT ranks 1st on our list of the best gambling stocks to buy according to hedge funds. While we recognize the potential of FLUT as an investment, our conviction lies in the belief that AI stocks have more promise in terms of higher returns and in a shorter time frame. If you’re looking for an AI stock that’s more promising than FLUT but is trading at less than 5x earnings, check out our report on the cheapest AI stock.
