Alternative Investments

How to Profit From the Tokyo Olympics

I operate by a really simple idea: The trend is your friend.

I’ve built a career – and fortune – zeroing in on not only the hottest trends in the markets but also the tried-and-true cyclical trends. The ones that you can count on year after year.

Well, one of my favorite cyclical trends to bank on every four years was delayed due to the pandemic. It has historically provided a boost to everything from clothes to sneakers and even food.

Now, even though this massive event was delayed, it’s offering a new booming opportunity that investors should be paying attention to… especially if they’re looking to add a little sparkle to their portfolios over the next several weeks.

$20.2 Billion Sprint

In 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) of 1992 as unconstitutional.

For more than two decades, this made sports betting largely illegal across the U.S.

But the demise of PASPA set the stage for the greatest expansion of gaming in 20 years.

Today, 25 states have commercial gaming operations in place. And 35% of Americans live in states where sports betting is now legal.
Legal Gaming in U.S.
This opportunity is expected to rapidly expand from here.

Now, total American gaming revenue was in the toilet last year due to traditional casinos being closed. But sports betting grew nearly 70% to $1.53 billion, and online gaming revenue surged 198.9% to $1.55 billion.

And the numbers are looking even better this year.
U.S. Monthly Sports Betting and iGaming Revenue
At the moment, mobile and online gaming – or iGaming – and sports betting account for 12.5% of U.S. commercial gaming revenue.

iGaming is gaining traction as basically every jurisdiction in the country is looking for ways to raise revenue.

Through the first five months of 2021, U.S. gaming revenue totaled $20.21 billion – a 13% increase over 2019. Plus, 16 of the 25 commercial gaming states are seeing revenues exceed those of 2019 – as first quarter revenue for the industry was the highest ever reported.

Now – thanks to a popular catalyst – we’re likely about to see sports betting revenue really vault higher.

A $227 Billion Marathon

The global casino and online gambling market is worth $227 billion.

And on Friday, one of the largest international sporting events kicked off – the Tokyo Olympics.

But beyond all the fanfare and rooting for countries and favorite athletes, there’s another storyline brewing. And it has nothing to do with the pandemic or politics.

At least 20 million Americans plan to place bets on the Tokyo Olympics. That’s roughly 8% of all adults in this country.

About 45% of those adults plan to place wagers on basketball, followed by the 34% of adults who plan to bet on soccer.

But most importantly, 43% will place bets online.

That’s an excellent opportunity for the likes of DraftKings (Nasdaq: DKNG) and Penn National Gaming (Nasdaq: PENN).

These two companies have the largest presence in the iGaming sector.

DraftKings originally started out as a fantasy sports platform. But it’s been able to pivot and capture an enormous share of the online sports betting market in the U.S., particularly in the massive New Jersey market.

Currently, 15 states have legalized online sports betting. DraftKings is present in 12 of them. Another six states have legalized iGaming. Of those, the company has a foothold in four.

Penn National Gaming owns, operates or has a stake in 41 gaming and racing properties in 19 states. It has more than 50,000 gaming machines, 1,300 table games and 8,800 hotel rooms.

It also offers live sports betting at its properties in Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, Pennsylvania and West Virginia.

And in 2020, the company made a big splash into the digital side of gaming by acquiring a 36% stake in Barstool Sports for $163 million. Over three years, Penn will increase its stake to 50%. This allows the casino operator to leverage Barstool’s brand and platform for online and retail sports betting as well as iGaming.

It’s a no-brainer… Whenever there’s a major sporting event, especially a global one, we see sports betting and iGaming revenue surge. And the best way investors can take home the gold this Olympics is by betting on this booming trend.

Here’s to high returns,

Matthew

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