LCA - Gambling Stocks: Buy Penn National Gaming Not DraftKings or Landcadia Holdings
With 22 states and Washington D.C. now having legalized sports gambling, the estimated $150 billion industry is ripe for the taking. Several companies are aggressively trying to carve out market share in the newly regulated activity that is expected to grow by 11.5% annually through 2025.
While high fliers like Landcadia Holdings and DraftKings are flashy names among investors, Penn National Gaming (NASDAQ: PENN) is the best way to invest in the space. Here's why.
Establishing a sports gambling presence will not be cheap. This is why Penn's casino portfolio is so ideal. As of today, 39 of Penn's 41 properties are open. Furthermore, revenue at Penn's properties is an impressive 94% of pre-COVID levels, and in the second-quarter earnings call, management said the company returned to positive free cash flow in early June. Penn's portfolio tilts strongly to regional properties that consumers generally drive to rather than flying to. With COVID-19 halting air travel, this exposure is greatly preferred.