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My pick of the ASX-listed gambling and wagering stocks

If you’re seeking investment exposure to the gambling and wagering sector then you’re in luck, the ASX has several listed companies to choose from. Below I’ve listed six such companies and named my preferred picks from the sector.

Tabcorp Holdings Limited (ASX: TAH) is Australia’s largest wagering company which recently acquired leading national lotteries business Tatts Group. Tabcorp has a market capitalisation of $10 billion with more than 4,000 venues around Australia, focussing on sports and race betting.

As an investment choice, I prefer the lotteries business to wagering and would have been very interested had Tattslotto been divested instead. There is intense competition among many online wagering businesses in Australia; spending big on marketing and promotions which cuts into profit margins.

Australian wagering laws and regulations are also changing, making for short-term industry uncertainty. In stark contrast, Tattslotto dominates lottery sales in Australia and the industry has been relatively stable for some time.

Crown Resorts Ltd (ASX: CWN) owns large casinos in Melbourne, Perth and London which comprise luxury accommodation, restaurants, shopping and entertainment options.

Crown also has a wagering and online business, though the company recently agreed to sell its majority stake of CrownBet for $150 million and is expected to settle the transaction in February.

2017 was a somewhat controversial year for Crown, with several leadership changes, staff jailed in China for illegally promoting gambling, and ongoing public debate regarding the company’s plans for a VIP casino in Sydney.

Star Entertainment Group Ltd (ASX: SGR) has a market cap of $5 billion, owning and operating The Star Sydney, The Star Gold Coast and Treasury Brisbane which also encompass restaurant, hotel, bar and other entertainment offerings.

The group is in the process of completing major projects in Sydney and the Gold Coast, as well as the redevelopment of Queen’s Wharf in Brisbane which is expected to open in 2022.

Skycity Entertainment Group Limited (ASX: SKC) is a New Zealand-based business with casinos, bars and restaurants located in Auckland, Hamilton, Queenstown, Adelaide and Darwin. The company also has hotel accommodation in Auckland and Darwin and is listed on both the Australian and New Zealand exchanges.

Skycity has invested NZD$700 million on the New Zealand International Convention Centre with adjacent retail laneway, expanded parking facilities and new 5-star hotel set for completion in mid-2019.

My preferred stocks in the sector

Aristocrat Leisure Limited (ASX: ALL) was once purely a poker machine developer and manufacturer that has now also become a significant player in the online social gaming scene, following two major acquisitions in 2017.

Aristocrat has been one of the ASX’s top performing growth stocks over the past five years, the company’s share price rising almost 600% during that time and now has a market cap of $15.5 billion. High investment returns will be on the cards again in 2018 if Aristocrat can successfully integrate its recent purchases.

Jumbo Interactive Ltd (ASX: JIN) is an online seller of Tattslotto and charity lottery tickets through the company’s OzLotteries.com website and smartphone apps.

Founder-led and with a market cap of just under $200 million, Jumbo has enjoyed exceptional growth over the past two years, sending the share price up 300%.

Prior to the Tabcorp takeover, Tatts Group bought a significant stake in Jumbo and the companies signed long-term contracts in place to 2022.

2018 is set to be another strong year for Jumbo; in early January the company announced an expected 43% rise in half year profit to December 2017, compared to the previous corresponding period.

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Motley Fool contributor Ian Crane owns shares of Aristocrat Leisure Ltd. and Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. The Motley Fool Australia has recommended Sky City Entertainment Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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