Penn and Caesar Join S&P 500: The gambling world is hot right now. Since the Supreme court struck down the federal ban on sports betting two and a half years ago, almost half the states in the union have some form of legalized sports betting. Budget shortfalls due to the pandemic have forced states to consider legalizing sports betting to make up for the losses.
Penn National and Caesar Entertainment Join S&P 500
For companies operating in the gambling industry, this rapid wave of legalization has turned it into a money pool. Last week the index owners of the S&P announced Penn National Gaming and Caesars Entertainment would be added to the index starting March 22, 2021.
For Penn National, the addition to the S&P 500 is the cherry on top for an already outstanding year. Penn is one of the nation’s largest and most diversified regional gaming companies. The company owns 41 properties across 19 states. But the pandemic is testing Penns ability to shift its business model to make up for the lower in-person traffic.
Penn interactive operates a line of retail sportsbooks that allow fans to bet online. The shutdown of all businesses and sports in March of last year almost destroyed the gambling industry. Penn has rebounded tremendously, thanks in part to its partnership with Barstool Sports in 2020; the sports media empire exclusively promotes Penn’s land-based and online casinos to its tens of millions of followers.
Penn’s partnership with Barstool Sportsbook is proving to be a success. It has more than 72,000 registrations with a handle of $300 million. Nearly all, 95%, of the registrations were new to the Penn ecosystem.
Last week Penn’s stock hit a record high of $142. Penn has gained almost 3,000% since its intraday low of $3.75 on March 18, 2020, at the onset of the coronavirus pandemic. The continued rise of Penn is a signal that Wall Street believes in the bounce-back of sports and casinos.
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In addition to Penn, Caesars Entertainment was added to the S&P. Like Penn, the stock has seen strong growth in the past year after tumbling in late February and March of last year as the fears of shutdowns took hold of the world. Caesars shares have gained 550% in the past 12 months, up from $13 a share to $90.
Caesar’s should continue to rise, especially if they complete the acquisition of rival William Hill. Last week Caesar’s announced it was in advanced talks for a $3.7 billion cash takeover of the U.K. sports-gambling firm William Hill, with the focus of acquiring its U.S. assets and betting technology.
The potential deal is the latest in a series of mergers and public offerings this year as the demand for legalized sports betting in the U.S. grows. Companies are focused on building customer databases and buying established mobile platforms built for online wagering, sports betting, and virtual casino games. Earlier this month, Caesars signed a deal with ESPN that would see the sportsbook’s odds integrated into ESPN’s website and fantasy app in states where sports betting is legal.
The deal followed a similar agreement announced in February between William Hill and ViacomCBS Inc.’s CBS Sports that enabled the gambling company to seek new customers among the media giant’s audience.
The U.S. online casino and sports betting market is expected to grow anywhere from $18 billion to an eye-popping $40 billion, according to research by the American Gaming Association. The top players are projected to be Flutter Entertainment PLC, owner of FanDuel and FoxBet brands, DraftKings, and Caesars.
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