The worldwide popularity of the gambling industry means the lion’s share of casinos have little to worry about when it comes to long-term planning. But a few developments in certain areas have caused consumer confidence to wobble – and, as a result, there’s been some small impact to the value of the stock market.
Casino stocks have struggled to gain momentum in 2018, and a lot of investors are worried that this disappointing track record may continue into next year. Macau’s gaming industry is seeing a decline in value, after many years of success, which is having a knock-on effect across the world.
Gaming revenue took a steep drop just a year on from the heyday of early 2014, but since showed promising signs of recovery. However, recent stagnation has seen a clutch of theories as to why Macau may not bounce back.
With construction of the Macau resort nearing completion, aside from a few hotel additions, it’s been speculated that visitors have seen everything there is to see there right now, and don’t have a solid reason to return any time soon.
Macau’s solid start to 2018 is in danger of slipping. But where does that leave the rest of the industry?
Why have gambling stocks underperformed in 2018?
As mentioned above, gambling stocks have suffered in 2018 and have fallen by double-digit percentages. But what has most people confused within the gambling industry is the fact that this decline in stocks was not in line with any kind of collapse in the wider economy. After all, bank stocks are on an upward curve.
What’s more likely to explain the decline is the rise of popularity in online gambling. With more and more people looking to the internet to enjoy their favourite casino games, it seems that fewer people are willing to go out and visit their local land-based casino. Vegas’ biggest casinos reported a 1% drop in foot traffic and room occupancy in Q2 of 2018 – nothing too major, but fairly worrying during the peak tourist season.
Are online casinos to blame?
There’s no denying that the popularity of land-based venues is on the decline. Even famous casinos in Las Vegas couldn’t avoid a downward spiral in stocks, with both Caesars Entertainment and MGM Resorts International reporting “soft numbers” for the second quarter, with little hope of performing much better in the third.
Casino stocks fell by 24%, which has led major casinos in Las Vegas to try and turn things around by enticing more visitors with luxurious restaurants, bars and more games. However, things like paid parking and low game odds are driving people away.
Online casinos are becoming an increasingly popular alternative to – and potentially explanation of – the declining land-based casino industry. There are more than 180,000 fewer real slot machines sitting on UK premises in 2018 than there were in 2017 – a 0.7% decrease.
People are being tempted by online casinos because it means they don’t have to leave the house, or spend money on parking fees, to play their favourite games. But not only that, these virtual operators now provide gaming that’s more immersive and engaging than ever – with some players preferring it to the real thing.
Whether for legal or purely logistical reasons, land-based casinos tend to have limits on the number of tables they can host. When you compare this with the fact that you can get potentially hundreds of casino games at the click of a button online, it’s not a surprise that lots of people prefer to make the most out of all the additional gaming options found online.
In addition to the casinos, the world’s biggest resorts often build in shopping centres and entertainment venues to keep the whole family happy.
In an effort to have everything under one roof, and with the added lure of online shopping that’s reportedly eating away at our high street, online gambling operators offer players the chance to spend points in their online store, in return for virtual rewards.
You only have to take a look at a reputable online casino sites like Wink Slots to see why people are ditching bricks-and-mortar and heading to online operators in their droves.
Online casinos vs land-based casinos
Many are worried that online casinos are taking the excitement out of visiting a land-based casino, which is both true and false. On one hand, playing online means you give up a few of the perks of playing in a real casino – drinks on hand, and staff looking after you.
However, when you look at the bigger picture, playing online casino games from the comfort of your own home comes with its perks. It’s comfortable and safe. You don’t have to worry about following a dress code, or having someone look over your shoulder as you spin the reels on your favourite slot game.
The future of casino stocks
With a disappointing summer, people are looking to the future in hopes that the casino stock market will improve in 2019. On the bright side, there’s still a lot of interest in gambling stocks, particularly in the US.
If you were interested in investing in casino stocks, there are a few that are less risky than others. This includes Golden Entertainment, Inc., which operates everything from casinos to slot routes and taverns. The company was formed in 2015 and is based in Nevada. It operates a range of casinos across Las Vegas including the luxurious Stratosphere and more budget-friendly options such as the Arizona Charlie. As for the stock market, Golden Entertainment is a safe bet. It’s expected to increase its earnings by 129% in 2019, according to ZACKS.
Will casino stocks recover in 2019?
As you can see, although the casino stock market has suffered a crash over recent months, it doesn’t lock the future in place. In fact, this is not the first time Las Vegas and the casino industry has faced adversity. In the past, stocks have lowered, but if history is to repeat itself, it won’t be long before they pick back up again and make a healthy recovery.
