These 5 stocks look odds on winners

The odds of ‘beating the house’ aren’t great. You’re better off owning ‘the house’!

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It’s hardly news that Australians and indeed many people around the world enjoy placing the odd bet. These bets occur on the races, by purchasing of a lottery ticket, putting coins in a poker machine and gambling at a casino. Interestingly businesses in this sector are often described as ‘recession proof’. By this I mean that whether the economy is strong or struggling, people still seem to continue their spending habits on gambling associated pastimes.

This defensive quality, coupled with the growth in Chinese gambling in Macau is no doubt a major factor in billionaire James Packer’s increased focus on gambling-related businesses.

The ASX offers an impressive selection of attractive gambling-related businesses. While the ever present risk of regulatory changes – as Echo Entertainment Group Ltd (ASX: EGP) found out recently – can certainly affect the outlook for companies exposed to the sector, on the whole the future growth potential of the following five stocks is promising indeed.

1)      Crown Resorts Ltd (ASX: CWN) provides shareholders with an investment alongside James Packer. The company owns casinos in Perth and Melbourne and will soon have a casino in Sydney. Crown also has an ownership interest in Crown Melco which owns the City of Dreams casino in Macau, China.

2)      Aristocrat Leisure Limited (ASX: ALL) is a leading manufacturer of poker machines. Aristocrat has impressively grown its operations to a position where it now has a footprint in over 90 countries around the globe.

3)      Tatts Group Limited (ASX: TTS) – For investors looking for exposure to the consistency of lotteries, wagering and sports betting then Tatts Group could be the answer. Without the ups and downs of VIP wins and losses which casinos must endure, Tatts’ earnings should be steadier and more reliable.

4)      Donaco International Ltd (ASX: DNA) is a stock off the radar of many investors, although that appears set to change. The company operates the first fully licensed table gambling business in Vietnam, with the property currently undergoing a major renovation and expansion. Donaco has recently tapped investors for more funds with a number of high profile fund managers backing the raisings, meaning the stock won’t be off the radar of investors for much longer.

5)      Jumbo Interactive Ltd (ASX: JIN) has carved itself out an exciting niche as the software and website provider of online lottery sales. Jumbo has achieved this feat both in Australia and abroad by partnering with major lottery providers. Its recent entry into Mexico and Germany which are much larger markets than Australia has the potential to result in significant growth for the company.

Foolish takeaway

As investors we are always looking for when the odds are stacked in our favour. Profitable gambling businesses are also very clever at stacking the odds in their favour which can make them superbly profitable businesses to own.

Motley Fool contributor Tim McArthur owns shares in Echo Entertainment Group Ltd.

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