Wagering and gambling is a part of Aussie culture and lifestyle, from the Melbourne Cup to a simple game of Pokies. Investing aside, we all like a game of chance once in a while and going out for entertainment is just as popular.
The gaming and wagering industry is big business, so investors should know of the opportunities on offer. Here are three that you should have on your watchlists.
Tabcorp Holdings Limited (ASX: TAH) operates a number wagering and gaming brands such as Luxbet, TAB, Keno and TAB Sportsbet. The business is in four segments of wagering, media & international, gaming services and Keno.
Sports and racing wagering brings in the largest portion of earnings, but the other segments have higher earnings margins. The company has been developing tablet PC and mobile wagering platforms like Luxbet and the growth has been good. More customers are wagering online, so capturing that market is crucial.
In the half year, statutory net profit was up 2.3% to $74.6 million, or 9.9 cents per share. The stock's PE is 19 and the dividend yield is 4.7%.
Tatts Group Limited (ASX: TTS) has a portfolio of gambling products and gaming services such as Tatts Lotteries, TattBet, Maxgaming, Bytecraft and Talarius. Its interim results were a 3.5% drop in revenue and a statutory net profit of $122 million, down 5% on the previous corresponding period.
The big money maker is the lotteries business, accounting for more than 50% of the half-year EBIT. Second is wagering. In third place is gaming, with its UK-based slot gaming business Talarius showing strong interim revenue growth.
Its share price has trended down since February 2013. Its PE is 17 and the dividend yield is 5.2%.
SKYCITY Entertainment Group Limited (ASX: SKC) is a casino operator with venues in Adelaide, Darwin, Auckland, Hamilton and Queenstown. In addition, it has hotel and convention businesses. Since 2011, both revenue and earnings have been rising and its return on equity is regularly in the mid-to-high teens.
First-half results had reported net profit down 7.8%, partly affected by refurbishments in two of its main venues, as well as the belated timing of international visitors in the first quarter.
Recently down to a low of $3.20 in December, the share price has risen about 18% to $3.81. Its PE is 17 and it has a 4.8% dividend yield.
Foolish takeaway
As consumer discretionary spending increases, people will put more money towards entertainment and leisure activities like gambling. However, we may see the growing trend in online wagering by tablet and mobile changing how they use the services.
