Is PENN Entertainment, Inc. (NASDAQ:PENN) the Best Las Vegas Stock To Buy Now?

We recently compiled a list of the 11 Best Las Vegas Stocks To Buy Now. In this article, we are going to take a look at where PENN Entertainment, Inc. (NASDAQ:PENN) stands among the best Las Vegas stocks to buy now.

The gambling industry is growing throughout the globe, with the United States being one of the fastest-growing markets. According to the American Gaming Association, more American adults participated in some kind of gambling entertainment activities than ever during the past 12 months. The survey found that more than 55% of American adults participated in gambling, with 28% going to a physical casino while 21% placed sports bets.

One of the key findings of the report was regarding gambling becoming more acceptable within the American population. As per the association, 9 out of 10 adults found casino gambling acceptable for themselves and others as well. This is good news for the US economy and casino companies as they will generate substantial revenues from increased acceptability of gambling. The United States commercial gaming revenue increased 8.9% year-over-year to reach $17.63 billion during the quarter. Q2 2024, marked 14th consecutive quarter of growth and was driven by casino expansion in various states of the country, including Illinois, Virginia, and Nebraska.

Sports betting is one of the major contributors to the overall gambling industry. Let’s take a look at some of the recent trends in the sports betting industry.

What’s Happening in the Sports Betting Industry

It’s hard to think about sports without sports betting or gambling. The sports betting and gambling industry in the United States has exploded in the past 6 years since it became legalized in most states across the United States. Currently, 38 states have legalized gambling and the industry generated more than $120 billion in total bets and $11 billion in revenues for 2023 alone.

In one of the recent episodes of CNBC Boardroom’s Game Plan Sports Event, the executives of FanDuel, Fanatics, and Sportradar discussed the new state taxes and betting industry trends. All the executive members on the panel found that betters are more interested in placing wagers on individual players, along with placing real-time bets during the live sports event.

Moreover, the CEO of FanDuel overturned his decision to charge a gaming supertax from its customers after his competitors decided against charging any such tax. This came in a reaction after two US lawmakers introduced a bill to address sports betting at the federal level. In one of our recent articles on 10 Best Casino Stocks To Buy According to Analysts, we discussed how the upcoming taxes are expected to affect the market. Here’s an excerpt from the piece:

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There is an upcoming tailwind which is expected to boost the industry further. The football season is back and the NFL is expected to spur a record $35 billion in legal sports betting. On September 3, CNBC reported that the United States will wage $35 billion this NFL season, marking a 30% increase since last year’s National Football League.

Much has changed since the last season. During the year states including Maine, North Carolina, and Vermont have allowed sports betting operations in their jurisdictions. Amidst the upcoming season, sports betting companies are feeling the heated competition and platforms are coming up with new strategies to capture more customers.

The president of FanDuel mentioned that the NFL season is one of the biggest acquisition periods of the year. The platform has partnered with YouTube and rolled out a “Sunday Ticket” offer, where players who bet at least $5 get a 3-week trial period to watch the NFL matches with Sunday Ticket. Moreover, as more than 95% of sports betting is happening online it presents an exciting opportunity for sports betting leaders to enhance their customer base and generate more revenues.

Our Methodology

To compile the list of 11 best Las Vegas Stocks to buy now we used the Finviz screener and ETFs. Using these two sources we first curated a list of 20 casino, gambling, and gaming stocks. Once we had the list, we then ranked these stocks based on the number of hedge funds holders during the second quarter. The list is ranked in ascending order of the number of hedge funds.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A casino floor with multiple gaming tables and slot machines illuminated by neon lights.

PENN Entertainment, Inc. (NASDAQ:PENN)

Number of Hedge Fund Holders: 30

PENN Entertainment, Inc. (NASDAQ:PENN) is a sports betting and casino gaming company that operates in 20 states with more than 43 properties. The company has online sports betting licensing for 18 jurisdictions and iCasino operations in 5 jurisdictions. It operates through a portfolio of renowned brands including L’Auberge, theScore Bet Sportsbook and Casino, Hollywood Casino, and ESPN BET.

The business of PENN Entertainment, Inc. (NASDAQ:PENN) is segmented based on the geographical locations it covers and includes Northeast, West, South, and Midwest segments. The company also has an online presence under its Interactive segment.

The overall market landscape of the casino and gambling industry has been challenging with a lot of competition. However, PENN Entertainment, Inc. (NASDAQ:PENN) has an advantage over the market due to its comprehensive mix of services. The company already owns a string of Brick and brick-and-mortar casinos and is now investing in mobile gaming, sportsbooks, and iGaming.

Its digital database within the interactive segment has improved by more than 81% since the launch of ESPN BET in late 2023. Moreover, the company has also significantly grown its monthly active users by more than 138% year-over-year.

On the other hand, the Brick and Mortar Casinos business has continued to be a successful venture for the company. The Hollywood Casino revenue grew 6.5% subsequently and its market share grew more than 89 bps year-over-year. The Hollywood property is not the only contender when it comes to market share growth. The Ohio property also improved its market share by 114 bps during the same time.

Despite an overall slow market environment, PENN Entertainment, Inc. (NASDAQ:PENN) has come up as a strong player in the industry. Looking forward, the growth is expected to continue at an accelerated pace as it is about to launch ESPN Bet in New York as well. New York accounts for around 6% of the total US population and is expected to add more than 10 million monthly active users to its digital database.

Hedge funds have also shown interest in PENN, which was held by 30 hedge funds in Q2 2024, with total stakes amounting to $663.69 million. HG Vora Capital Management is the top shareholder of the company, with a position worth $280.6 million.

Greenlight Capital stated the following regarding PENN Entertainment, Inc. (NASDAQ:PENN) in its first quarter 2024 investor letter:

Overall PENN ranks 11th on our list of the best Las Vegas stocks to buy now. While we acknowledge the potential of PENN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure. None. This article was originally published on Insider Monkey.