US Casino Gambling Industry to Overtake UK as Biggest Investment Opportunity

Investing in an online casino has long been considered a bad bet. The global online casino industry has been in decline since the Covid-19 pandemic triggered a boom in “alternative” entertainment options, with everyone locked inside looking for something to do.

Stock prices are down around 50% from where they were before the coronavirus struck. Even the rapid expansion of American online gambling has failed to fill the void that investors seek when it comes to eking out profits in a sputtering global economy.

However, recent reports on both sides of the Atlantic suggest that reinvesting funds in gambling companies may be a viable option once again. There is hope that the US market, which has been bleeding dollars for years in a never-ending land grab for individual state market share, is about to start making money.

Meanwhile over in the UK there is expectation that a once-lucrative industry is about to get a lot more restricted when the government finally passes its long-awaited new Gambling Act.

So where does the future of online gambling lie? Well, according to investment bank Houlihan Lokey, firmly in America.

More people are gambling online compared to those attending an in-person casino

Casino Investment Options

For years the UK has been identified as the go-to online gambling haven for investors seeking a steady return. Firms like bet365, Flutter and 888 have reaped billions of pounds from players in an industry that, while stringent on fraud and account protection, is incredibly lax on advertising and marketing.

Sports betting fans are accustomed to witnessing gambling ads before, during and after games, whether they watch live, on TV or online. Casino gambling campaigns litter Saturday night gameshow advertising breaks, making no attempt to differentiate between of-age and minor viewers.

Right now the UK online gambling industry is the biggest in the world, with $12.5bn of gross revenues generated in 2021 alone. To put that into context, the US is second ($11bn), Australia third (£6.5bn) and Italy fourth ($4.5bn).

The fact the UK’s online industry is almost three times as big as the world’s fourth largest industry – Italy – highlights just how much Brits enjoy betting and casino play.

But all that is about to change. Every year more and more American states agree to legalise sports betting and mobile casino games, in order to a) keep the lobbyist off their back and b) reap tax receipts from every wager. New York, New Jersey and Michigan have already seen their industries thrive in just a few months.

And this opens the door for investment opportunities across the pond. The likes of Flutter and 888 have already entered the market, teaming up with US brands to offer their odds, casino games and bingo cards to American players. European firms are pouring cash into the US market, and it’s been spent on advertising campaigns to attract a whole new demographic of potential customers.

Their investments include:

• Flutter – Owns FanDuel and in corporate relationship with FOX
• Entain – Engaged in a joint venture with BetMGM
• William Hill – Bought by Caesars after early success in the US market
• 888 – Engaged in a joint venture with Playtech
• Bet365 – Engaged in various ventures across the US

Suddenly investors are looking at the US gambling houses and wondering if they’re the right fit for their money.

Power Shift In Casino Gaming Industry

The power shift is very much on. The global online gambling industry is expected to be worth $100bn by 2027. Of this, a large proportion will be centred in America and Canada. Europe – not only the UK but also Germany, France, Netherlands and swathes of Scandinavia – is bringing in more gambling restrictions.

And where tight regulation goes, investors seeking a big profit usually flee.

The US casino gaming industry is still in its online infancy and, as huge as it is, remains loosely regulated compared to proposals set in Europe. What’s more, companies in America have lost billions of dollars on marketing just to eke out a share of the pie. The expectation now is that casinos will turn the ad tap off, and rely on their newly-built customer bases to start generating profit.

Eventually it is expected these gambling sites will get a return on their initial investments. As the Investors Chronicle puts it, there is an “anticipated pivot to profit over the next couple of years [that] is a key trend to keep an eye on as revenues grow swiftly”.

Flutter, for example, is already seeing better-than-expected revenue rises from FanDuel, which now has a 42% share of the US online sports betting industry. Entain also recently enjoyed a record quarter that saw BetMGM successfully launch in Maryland, Ohio and Massachusetts.

It appears as though America’s casino gaming industry is now headed in the “right” direction. Five years on from the federal government’s approval of legal online gambling and casinos are finally a realistic investment opportunity in America.

UK Gambling Industry Better For Players

Of course, that isn’t to say the UK industry is headed for a collapse. Far from it. Betting firms are well protected ahead of the country’s impending rule changes to online gambling – and are always seeking new areas to invest in.

Competition is also fierce, with scores of the best online casinos battling for market share while investment funds are diverted towards the US. This affects all gambling sites, which have to remain dedicated to bringing the best experience to players, and are competitive enough to offer high jackpots and good odds, in order to keep their customers happy.

The UK online gambling industry is only going to get stronger in time. Not as much as America, but certainly a good second-best.