Gambling Stocks Rise, as Dow Jones Crosses 20,000 Threshold
Posted on: January 25, 2017, 11:33h.
Last updated on: January 25, 2017, 12:32h.
As the Dow Jones Industrial Average topped 20,000 for the first time in American history, a symbolic milestone that shows a renewed optimistic mindset in America, gambling stocks have also been riding the wave.
Knowing that someone with an open mind towards Las Vegas and Atlantic City now sits in the Oval Office, investors on Wall Street have been taking a closer look at buying into companies that operate in the gaming and hospitality industries.
Indeed, US stocks across the board have grown since Trump’s surprising defeat of Democratic favorite Hillary Clinton on November 8, with NASDAQ and the S&P 500 both reaching record highs this week following President Donald Trump’s January 20 inauguration.
Casino mega-giants like Sheldon Adelson’s Las Vegas Sands, Caesars Entertainment, Steve Wynn’s Wynn Resorts, and more, have experienced a bump as well, although not to the tune some expected.
CNBC “Mad Money” host Jim Cramer opined on his show recently that the news of Trump taking office, as well as Macau’s rebound, should be leading to more bullish action on gambling stocks. The outspoken financial analyst says the president’s inauguration speech focusing on buying American and hiring American will be a boon for the US economy.
Not only is a former casino boss now the president, but one of his informal economic advisors, billionaire Carl Icahn, retains a 68 percent stake in Tropicana Entertainment.
The name of the stock market game is buying low and selling high. As the Dow hovers around 20,000, analysts are trying to determine if the market will continue to grow in the short-term, or if a retraction is imminent.
Trump is threatening auto companies with a tax of up to 35 percent for manufacturing in Mexico and then trying to sell the vehicles in America. He also took executive action to revive pipeline projects, and has instructed the GOP-controlled Congress to bring him an Obamacare repeal plan.
There’s much left to be seen on what exactly a Trump economy will look like. But for casino companies, a more unwavering environment might be approaching.
Atlantic City has finally found some sense of stability, as has the Las Vegas Strip. The NFL Oakland Raiders appear likely to make the transition to Las Vegas in the next few years, which would provide a new influx of visitors, and highlight the city on national television each Sunday.
Asian Markets, Sports Betting Potential Fuels Growth
Perhaps more importantly, Macau managed to produce a gain in 2016, despite China’s crackdown on VIP players.
And then there’s Japan, the biggest jackpot of them all. The country is currently in the process of legalizing land-based resort-style casino gambling, with Sands and MGM chomping at the bit to start building there.
Sports betting legalization also remains a topic of consideration nationwide. Should the Professional and Amateur Sports Protection Act (PASPA) of 1992 be repealed or replaced, casinos outside of Nevada would stand to finally bring in the billions of dollars currently being wagered offshore to their sports book floors.
The one potential negative to a Trump presidency could be online gambling. Attorney General nominee Jeff Sessions told Congress he would review the legality of internet casinos, but in reality, whether this is likely to be a priority for a new administration stacked with urgent issues seems unlikely at best.
How Gambling Stocks Have Performed Since Trump Took Office
Las Vegas Sands (NYSE: LVS) Owned by billionaire Sheldon Adelson, one of Trump’s largest campaign contributors and a staunch supporter of outlawing internet gaming, LVS has remained relatively flat. Shares of the company traded at $59.48 on Election Day, and today are about $56.50.
Wynn Resorts (NYSE: WYNN) Another Trump friend, Steve Wynn’s company is on a great ride. Shares have soared from $86.67 on November 8 to $97 today, an 11 percent bump.
MGM Resorts (NYSE: MGM) No casino company is more bullish on constructing new venues than MGM. It recently opened properties in Macau and Washington, DC, and is working on a venue in Massachusetts. The investment is paying off for shareholders, as MGM has grown from $28 to nearly $30.
Caesars (NYSE: CZR) The bankrupt entertainment company has also seen its bankroll grow, as the stock has gone from $6.95 to $9.30. That’s a whopping 25 percent gain.