Back in September, we ran a piece suggesting that the pandemic made for a good time to invest. This of course wasn’t true with regard to every kind of investment. But the point was that while some assumed it was a time to pull money from all markets, COVID-19 had actually presented favorable circumstances for certain kinds of investments.
In the September piece, we focused more on strategic investment methods than markets. It has also become clear over time however that there were in fact certain markets that made for profitable investments during the pandemic. And one very clear example that doesn’t get talked about a whole lot is the online casino gaming sector. One need only glance at a few charts to see that major companies in said sector — Ladbrokes, NetEnt, and more — steadily gained value following a brief dip in the earliest days of the pandemic. In many cases, the charts are still moving up.
This pattern is not difficult to decipher. These are multi-faceted gaming companies that support a huge volume of online recreation, from sports betting, to slot machine play, to poker tournaments. What’s interesting moving forward, however, is the fact that poker specifically appears to have played a key role. In those U.S. states that do have legal, real-money online gaming, revenue soared while brick-and-mortar casinos struggled. And lest we question how much of this can be chalked up to poker, one of the simplest analytical tools suggests that it can be: searches for online poker spiked significantly on Google during the pandemic.
The reason we’re noting this now is that there’s a chance it is foreshadowing a lasting trend, at least in the U.S. Online poker has not been what it was in America since government crackdowns on paid sites in the early 2010s. But the developments discussed above point to renewed popularity that could last, and could even grow.
So, does that make poker sites good investments for the future? We can’t answer that question with certainty (and you should of course do your own research before making any investment decisions). But we can point to four factors to watch in assessing the question.
1 – Will the pandemic trend continue?
It’s a straightforward question, but a tricky (if not impossible) one to answer in advance. As explained, online poker surged during the pandemic, helping to fuel the gains we saw from a number of internet casino platforms. It’s quite clear that this was a result of pandemic isolation that led people to seek entertainment and social activity online. But will those who turned to online poker stay with it as the world opens up again? So far, there are some subtle indications in online gaming revenue that the trend will continue. But we aren’t back to “normal” yet, and it’s a little early to take data too seriously. We won’t know for some time yet if the trend is truly here to stay.
2 – Will legal poker spread?
We previously alluded to the fact that only some states allow online gaming sites to operate legally. To be a bit more specific about it, there are currently only five states with legal online poker in which real money can change hands. Those states are Nevada, New Jersey, Delaware, Pennsylvania, and Michigan. These states alone generate enough gaming business to move charts for relevant companies. But if online poker is ever to prove to be a truly lucrative investment, we will need to see legalization in additional states. If the pandemic-era trend does continue, and more states open their doors to gaming sites, online poker could fuel massive growth.
3 – Will new competitors emerge?
With specific regard to the U.S. market, it will also be crucial to watch which platforms are actually supporting online poker growth (if in fact we see such growth). For example, back in 2019 we saw a $12 billion deal struck between the owners FanDuel and PokerStars to create the “world’s biggest online betting group.” To a casual observer or someone just beginning to explore investment in this sector, it’s likely that PokerStars will be an expected name —
but FanDuel might not be. This was originally a daily fantasy platform, but it is now one that stands to benefit from the spread of online poker in the U.S. Will there be similar platforms new to the category that will also be in position to thrive? Might there be new sites altogether that don’t exist now, but will own chunks of the U.S. market in five years? These are all important questions to keep in mind.
4 – What is the projected timeline?
Finally, if the answers to the questions above add up to an intriguing investment opportunity, it’s also important to ask what the projected timeline might be. How long the poker trend endures, how quickly legalization occurs, and when competitors emerge will all factor into the success or struggles of poker platforms as well.
Based on what we know now, we’re not making a recommendation on this category one way or the other. With certain sectors and companies looking intriguing as we crawl out of the pandemic though, online gaming and poker platforms are definitely worth watching.
