Sports betting has been illegal in the United States in most locations since the early twentieth century. However, Congress is now reviewing the three main sports betting laws on the books, a process that could have major implications for U.S. casino stocks.
ESPN has reported that a congressional committee is reviewing sports gambling laws. Sports gambling in the U.S. is currently regulated by the following three laws:
- The Interstate Wire Act of 1961 makes all sports betting using the internet and other forms of connectedness a federal crime.
- The Professional Amateur Sports Protection Act of 1992 (PAPSA) banned sports betting nationwide, with the exception of Nevada and a few other states.
- The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is the law that banned online poker websites, but explicitly excluded fantasy sports from the ban.
Instead of the current patchwork of outdated laws, Congress may choose to create a new, comprehensive law to legalize sports betting nationwide.
With that in mind, here are three casino stocks that would benefit from this legalization.
Casino Stocks to Buy: Amaya Inc. (AYA)
On the surface, it may seem like legalized sports gambling would be nothing but good news for U.S. gambling stocks. However, legalization would certainly create a tidal wave of new online sports betting competition.
Hundreds of new online gambling websites and apps would likely pop up overnight. Online and mobile gambling could siphon off potential gamblers from casinos. Of course, sites and apps that are already established will have a leg-up on the new competition.
Canadian company Amaya Inc. (NASDAQ:AYA) launched its PokerStars online platform back in March. If U.S. sports betting is legalized, look for AYA to expand its platform to sports betting and invade the U.S. market. Amaya reported only $59.6 million in casino and sportsbook revenue last quarter. If the U.S. sports betting market opens up, AYA’s sportsbook revenue could easily approach its $215 million quarterly poker revenue.
With a market cap of only around $2 billion, even a fraction of a new U.S. legalized sports betting market could have a big impact on AYA stock.
Casino Stocks to Buy: MGM Resorts International (MGM)
Despite the risk of new competition, casinos are making…
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