The Motley Fool

7 stocks to profit from the growth in gambling

Forget about Black Jack. Unless you can count cards, it’s a loser’s game. Roulette is even worse. The house always wins.

That’s why the safest bet for any gambler is to buy the casino. Sound unrealistic? It’s not. In fact, you can take ownership of a casino for as little as a couple of dollars.

Unless you’re a professional gambler or mathematician, the only way to win consistently is to invest in stocks. There are many companies listed on the Australian Stock Exchange Ltd (ASX: ASX) which control the majority of Australia’s casinos and have interests in booming gambling regions throughout Asia such as Macao.

The obvious examples are Crown Limited (ASX: LTD) and Echo Entertainment Group (ASX: EGP) which control the biggest Australian venues. Crown shares exemplify what we all know – you shouldn’t bet against the house – in just 12 months its shares are up 50% with more growth on the way.

I’ll admit traditional gambling is somewhat like shares because when you don’t know what you’re doing, putting your money on the market can feel like roulette. You never know where the little ball will land but you know, you’ll only win or lose.

Two sure things

You may not know Sky City Entertainment Group (ASX: SKC) or Donaco International Ltd (ASX: DNA), but both are rolling the dice on higher earnings in coming years. Skycity operates in Adelaide and throughout New Zealand, whilst Donaco has its resort and casino in Lao Cai on the Vietnamese border near China. Analysts are expecting big things from these two as a result of their continued investment in new and existing operations.

Without a big reward there’s no reason to lay money on the line. But Aristocrat Leisure Limited (ASX: ALL), Ainsworth Game Technology Limited (ASX: AGI) and eBet limited (ASX: EBT) are doing exactly that. They’ve found ways to tap into a high margin, high risk and high reward niche market which takes advantage of technology to control gamblers’ thirst for winnings. In the last year alone they’re up 34%, 22% and 90% respectively.

Foolish takeaway

Gambling and the stock market have their similarities but they’re not the same. For one you don’t have to play all your cards right to achieve the minimum return in the stock market and you almost always get something back on your investment. Even some of the best gamblers in the world, such as David Walsh – multimillionaire and owner of the Museum of Old and Modern Art in Hobart – was quoted in the Australian Financial Review as saying: “If someone wants to assume high risk with very little cash, financial markets, with their correlated parlays, are probably the right place to be.”

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Motley Fool Contributor Owen Raszkiewicz owns shares in Donaco International. 

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