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Gambling Stocks: Hitting a Jackpot?

15 February 2013 in Trading Ideas

It looks as though New Jersey will soon become the third, and most populous, state to legalize online gambling. That’s causing renewed interest in stocks related to the gambling industry, like casino operators and gaming equipment manufacturers.

The looming change in New Jersey follows a series of back-and-forth moves between the legislature and Gov. Chris Christie, who said he would soften his opposition to online gambling if a proposal were to include, for example, funds for programs to treat gambling addiction. Gaming proponents say they’ll accommodate the governor’s concerns, and the change is expected to become law in the next month or two1.

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New Jersey is approaching internet gambling with an eye to protect the casinos in Atlantic City, one of the state’s major tourist attractions and revenue sources. The proposed law is written so that for all practical purposes, only New Jersey casino operators can get the necessary approvals to go into the online gambling business. Nevada took a similar approach when it legalized online gaming, skewing the law in favor of Las Vegas’ gaming locales2.

The state laws affect only their own residents, meaning that even if New Jersey approves online gambling, it will still be illegal for residents of neighboring New York and Pennsylvania to participate. And each state can legalize gambling as they see fit, which Nevada and New Jersey have made clear by protecting powerful local industries.

The only other state that has okayed web wagering is Delaware, which has no homegrown casino industry. But as strain grows on state and local budgets, lawmakers everywhere are beginning to consider online gambling as a potential revenue source.

casino gambling motif

The Casino Gambling motif focuses on many companies that have a stake in the decisions coming out of New Jersey and other states. This motif is up 14.6% over the last 12 months.

1http://www.nj.com/politics/index.ssf/2013/02/democrats_plan_to_back_christi.html

2http://news.investors.com/newsfeed-marketwire/021113-141434439-gaming-stocks-surge-as-new-jersey-inches-closer-to-legalized-online-gambling.aspx

  1. Jeff Thomas
    17 Aug at 1:22 pm

    I am new to investing and I am interested in the gambling motif.
    What I am not sure of is how much it will cost to get going. Is there a share price and how would I follow it. Thank you

    Reply

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