Top Casino Stocks for Q2 2023

LNW is top for value and NGMS leads for growth and momentum

A motorcyclist stops for a traffic light in front of the Casino Lisboa.

Anthony Kwan / Getty Images

Top casino stocks for the second quarter include NeoGames SA, Melco Resorts and Entertainment Ltd., and DraftKings Inc., all of which have climbed by at least 84% in the midst of a broad recovery after COVID-19 shutdowns devastated the industry.

The VanEck Gaming ETF (BJK), an exchange-traded fund, is used as a benchmark to gauge the performance of the casino industry, although it also contains other gaming and online betting companies. BJK has surged by 28% in the last year while the Russell 1000 Index has climbed 7%.

Below we look at the top casino stocks based on best value, fastest growth, and most momentum. The benchmark figures above are as of May 19, while all data below are as of May 16.

Best Value Casino Stocks

These are the casino stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

Best Value Casino Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Light & Wonder Inc. (LNW) 60.20 5.5 1.6
PENN Entertainment Inc. (PENN) 23.18 3.6 5.7
MGM Resorts International (MGM) 41.15 15.0 8.8

Source: YCharts

  • Light & Wonder Inc.: Light & Wonder, formerly known as Scientific Games Corporation, designs gaming content for casinos and related businesses. The company recently repaid $4.8 billion in debt, reducing its total outstanding debt by 55%. Light & Wonder's quarterly earnings shrunk in the most recent quarter following the company's divestiture of its lottery and sports betting business.
  • PENN Entertainment Inc.: PENN provides entertainment, sports content, and casino gaming services. It operates both gaming properties nationwide and online sports betting services. Net income rose tenfold in the first quarter of 2023 after the company purchased Barstool Sports and recorded a $500 million gain from reclassified lease components.
  • MGM Resorts International: MGM Resorts operates gaming and entertainment resorts, providing accommodations, hospitality management, dining, and other services for casinos and non-casino properties around the world. MGM's net revenue increased by more than a third in the latest quarter amid a rebound in leisure travel and the company's acquisition of Cosmopolitan of Las Vegas.

Fastest-Growing Casino Stocks

These are the top casino stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one
figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.

Fastest-Growing Casino Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
NeoGames SA (NGMS) 27.16 0.9 N/A (see company description) 273.8
Las Vegas Sands Corp. (LVS) 58.41 44.6 -94.3 124.8
VICI Properties Inc. (VICI) 31.10 31.2 48.6 110.7

Source: YCharts

  • NeoGames SA: NeoGames is an Israeli technology company that provides iLottery and iGaming solutions and services for lottery and gaming operators worldwide. The company's business combination with Aspire Global contributed to revenue growth, but it maintained strong growth in its core lottery business regardless. NeoGames doesn't have an EPS growth figure above because it reported a net loss in the latest quarter. Additionally, NeoGames announced in mid-May that it would be acquired by Aristocrat Leisure Limited for $1.2 billion.
  • Las Vegas Sands Corp.: Las Vegas Sands is a developer and operator of integrated resorts, with properties including Marina Bay Sands in Singapore, The Parisian Macao, the Venetian Macao, and several other resorts. Revenue surged in the first quarter of the year as leisure travel picked up in Singapore and Macau after COVID restrictions were lifted. EPS plunged as a result of a gain on disposal of discontinued operations of about $2.9 billion in the prior-year quarter.
  • VICI Properties Inc.: VICI is a casino and hotel real estate investment trust (REIT). It owns a portfolio of gaming, hospitality, and entertainment properties including Caesars Palace Las Vegas, MGM Grand, and the Venetian Resort Las Vegas. VICI's revenue more than doubled in the latest quarter as leisure travel rebounded and it acquired four properties from PURE Canadian Gaming.

Casino Stocks With the Most Momentum

These are the casino stocks that had the best returns over the past 12 months out of the companies we looked at.

Casino Stocks With the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
NeoGames SA (NGMS) 27.16 0.9 124.8
Melco Resorts and Entertainment Ltd. (MLCO) 11.30 4.9 116.1
DraftKings Inc. (DKNG) 22.92 10.6 83.7
Russell 1000 Index N/A N/A 6.9
VanEck Gaming ETF (BJK) N/A N/A 27.6

Source: YCharts

  • NeoGames SA: See company description above.
  • Melco Resorts & Entertainment Ltd.: Melco is a Hong Kong-based developer and operator of resort properties in Asia and Europe, with a primary focus on properties in Macau. Melco's first quarter 2023 revenue improved about 51% relative to the prior-year quarter as COVID restrictions in Macau relaxed.
  • DraftKings Inc.: DraftKings is a fantasy sports and sports betting company. It operates a platform providing daily and weekly sports-related contests to customers in the U.S. The company recently launched DK Horse, its first horse-racing betting platform, in 12 states and as part of a broader expansion campaign.

Risks of Casino Stocks

Casino companies are often categorized as sin stocks, publicly traded companies that are involved in morally dubious activity. Sin stocks, like producers of alcohol, cigarettes, and firearms, are generally defensive plays that remain stable during economic uncertainty. However, sin stocks are vulnerable to negative publicity and shifts in public opinion. They also come with above-average regulatory risk.

A recent example is sports betting in the U.S. The regulatory landscape is shifting, with different states adopting a wide variety of approaches to regulation. Some regulators have pushed back against legalized sports betting, citing potential damage to public welfare.

Sin stocks like casinos may also be subject to threats from illicit operators outside of the regulated industry. The American Gaming Association in 2022 called illegal gambling operators a "serious threat" and asked federal regulators to crack down on offshore sites.

Trends in Casino Stocks

The global gambling market is expanding rapidly. It was valued at $449 billion in 2022 and is estimated to grow to $848 billion by 2032. Sports betting and online gambling are expected to be major catalysts of growth going forward.

Demand for digital gambling is being driven by the ubiquity of smartphones and individuals' increased spending power, among other factors. The online gambling sector is also predicted to profit from a rise in female casino patronage, as well as the convenience of using cashless methods of payment. The industry's growth is also being fueled by the advancement of new technologies such as virtual reality and blockchain.

Casino companies are also wagering on sports gambling to diversify their revenue: Since the Supreme Court legalized sports betting outside Nevada in a landmark 2018 decision, several states have allowed companies to establish both brick-and-mortar sportsbooks as well as online and mobile sports betting apps.

Article Sources
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