With casino equities being among the most vulnerable and positively levered to happenings in the war against the coronavirus, the VanEck Vectors Gaming ETF (NasdaqGM: BJK) is a prime example of an ETF that’s been in focus this year.
BJK tries to reflect the performance of the MVIS Global Gaming Index. For index eligibility, companies must generate at least 50% of their revenues from gaming. Gaming includes casinos and casino hotels, sports betting (including internet gambling and racetracks), and lottery services as well as gaming services, gaming technology, and gaming equipment.
Recently, BJK is rallying as casinos in Las Vegas and regional gaming venues reopen, but there are still catalysts to power BJK, particularly if Macau, the world’s largest gambling market, rebounds in earnest in the fourth quarter.
“Macau, the world’s largest gaming center, isn’t really reopened. Sure, one can gain entry to the plethora of casinos there. It’s getting to the Special Administrative Region (SAR) that’s difficult because mainland China and Hong Kong are still restricting travel to Macau,” according to InvestorPlace. “As such, gaming revenue there is at rock bottom levels. However, Macau operators believe there’s pent up demand and when travel bans are relaxed, the floodgates will open and gamblers will again flock to the casino mecca.”
Betting on BJK
One of the primary catalysts for BJK is increased legalization of sports betting here in the U.S. Currently, 23 states are legal sports wagering states with 18 being operational. The driver for BJK here in the States is internet casinos or iGaming. Both of these markets are expected to swell to $20 billion in the coming years as more states look for new ways of generating revenue.
During the multi-month shutdown forced by the virus, states’ collection of gas, sales, and gaming taxes were in trouble. Now coffers are running light, prompting some analysts to say more states will approve internet casinos and/or sports betting as avenues for generating revenue.
Several states, including Louisiana, Maryland, South Dakota, and Virginia, are slated to vote on sports betting ballot initiatives in November.
“As for iGaming, data suggest that’s a booming business. In Pennsylvania, a market in which DraftKings operates, online slot machine handle topped $1 billion for the first time in May, while table games saw $778.5 million in action, up to $150 million from April, according to the Pennsylvania Gaming Control Board (PGCB),” reports Casino.org.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.