The world of online gaming is incredibly dynamic and very interconnected. There are hundreds of brands in the iGaming space, and yet both small startups and top performers are using the same software companies. These tech companies that are powering the gambling sites do much more than provide games. They are also there to increase player security, create a more immersive or personalized experience, and innovate.
So, if you are a fan of casino gaming and you love good financial investments there are two things you can do. One is to find the best no wagering free spins offers and see if you can get lucky. These are amazing bonuses that allow you to gamble risk-free, and with some luck, turn bonus spins into withdrawable cash. The other thing you can do is invest in one of the tech giants that we’ll cover here.
The Growing Casino Software Industry
The Casino software industry is a broad term and it covers companies that innovate on different fronts.
- Regulatory sector – Ensures fairness and that payout volumes and frequencies are up to local regulatory standards. It also encompasses responsible gambling tools and overall player security.
- Gaming sector – Innovations that help enhance the player experience. Right now big buzzwords are VR or Metaverse casinos that create immersive environments and leverage the capabilities of blockchain technology.
- System integrations – Gambling sites rely on payment technologies, communications software, servers, and content management systems. as well as other databases. Seamless API integrations are crucial to keep everything running smoothly, and for keeping sensitive data organized.
In other words, this is the infrastructure that keeps this industry running. New brands come and go, but they still rely on this tech to operate. Therefore, investing in these companies is a prudent decision. As always you should diversify your portfolio and pick multiple options. So, let’s go over some of the top suggestions in this sector.
Roundhill Sports Betting & iGaming ETF (BETZ)
This is an exchange-traded fund that aims to track the performance of globally listed iGaming companies. The idea is to help retail and institutional investors get acquainted with the top performers in the industry. They also have 3 types of companies in their classification:
- Those that operate as land-based and/or online sportsbooks
- Those that run online gambling sites
- Those that provide tech infrastructure to the land-based and online gambling operators
They also track the risks associated with these investments. Like their liquidity, product lines, ability to meet regulatory standards, sensitivity to political factors etc. Also, if you were to go over their top holdings you would see that almost all of the major iGaming players are there.
- Flutter Entertainment
- Kindred Group
- Churchill Downs
According to Wall Streets analysts BETZ is regarded as a moderate buy. They began trading in the year 2020 and were performing a lot better in the year 2021.
Churchill Downs Incorporated (CHDN)
Churchill Downs is a multi-faceted company that hosts racing events, online gambling and gaming entertainment. They are known for the Kentucky Derby as their flagship horseracing event, and they own and run 12 casinos and 13 race tracks.
The main stockholders are Capital Research Global Investors (9.09%), Vanguard Group Inc. (8.97%), FMR, LLC (8.55%), and Blackrock Inc. (8.15%). According to 8 Wallstreet Analysts CHDN is a strong buy. Their annual revenue for 2023 was $2.381B which was a 40.49% increase compared to the year 2022.
Light & Wonder, Inc. (LNW)
LNW is a Vegas-based tech company that does manufacturing and distribution of VGT (video gaming terminals). Additionally, they develop and publish digital games for casino apps and websites, and design video lottery terminals as well as electronic table games. They have offices in Europe, Africa, the Middle East, and Asia. Some of the big tech brands that are subsidies of LNW are NYX Gaming Group Limited, Bally Technologies, WMS Industries and MDI Entertainment.
5 out of 7 WS analysts recommend LNW stock as a strong buy, while 2 recommend them as a hold. Currently, the main shareholders, owning around 10% each are Blackrock, Vanguard and Fine Capital.
International Game Technology PLC
Founded in 1975, IGT is one of the oldest industry veterans. They are based in Las Vegas and focus on manufacturing and distributing slot machines as well as other casino games. They operate in 100 countries and their products are used by retail and mobile sportsbooks, racetracks, lottery corporations, and commercial and tribal casino establishments.
As far as institutional shareholders go Bank Of New York Mellon Corporation owns (5.31%), TPG GP A, LLC (4.14%), Massachusetts Financial Services Co. (3.57%), and Blackrock Inc. (2,70%). The upside potential is estimated at 33.69% and 3 out of 4 analysts recommend it as a strong buy, while 1 recommends it as a hold. Still, some analysts regard IGT’s ROE as sub-optimal and believe they should be performing better, especially in the hospitality industry.
Super Group (SGHC) Limited (SGHC)
This is a holding company with a strong presence in the iGaming industry. They are owners of two big brands. Betway for sports betting, and Spin for online casino gaming. Both of these brands are leaders in high-growth markets and in many ways dictate user-experience standards in online gambling entertainment.
The major shareholders are insiders (71,49%) while the top institutional holder is Blackrock, owning 1.36%. The analysts deem it a moderate buy, and the company isn’t performing nearly as well as it did back in 2021 and 2022. Given how they are primarily focused on the online gaming market this was expected. During lockdowns, almost all digital gaming companies have seen a surge in user spending, and this one is no different.
Investing in Casino Software Stocks: Market Trends
This is an extremely competitive market so the trends are prone to changing. The suggestions above are regarded as safer investment opportunities as they don’t compete with other operators but rather provide the infrastructure. Back in May of 2023, Light and Wonder was deemed as the best-value stock, as it has reduced its outstanding debt by 55%. Another big trend at that time, value-wise, was MGM Resorts, a big brand in the Las Vegas strip.
Some of the fastest-growing were NeoGames SA, Las Vegas Sands Corp. and VICI Properties Inc.. Generally speaking, the market was valued at $449 billion in 2022, with speculations it will reach $848 billion by the end of 2032.
So the way things stand a lot of these stock options are seemingly a good purchase. That being said emerging tech could disrupt the current trends. Metaverse casinos and the growing acceptance of cryptocurrencies are the potential future of online gambling. Due to strict regulatory requirements, it’s difficult to fully embrace this model in the West. Many offshore operators are already working on adding these capabilities and enhancing the customer journey on their sites.
Submitted by: Jamie Wall
Jamie is a game developer and casino analyst who started his iGaming career in NetEnt. He works at gamblizard.com and writes in-depth reviews on sportsbooks and casino operators to help new players identify the strengths and weaknesses of each site. James also loves to travel, binge-watch true crime documentaries, and play online games with his friends.