2021 has been a crazy year for investors. The year started off with a number of short squeezes performed by a coordinated group of retail investors followed by turbulent ups and downs in the cryptocurrency market.
Shortages of shipping containers and commodities like wood have also led to big swings for many asset classes, while inflation fears are one of the reasons many stocks are trading at record P/E ratios.
The rising prevalence and popularity of Special Purpose Acquisition Companies (SPACs) have attracted a lot of attention as investors flock to buy into these empty shell companies without knowing exactly what company it will be acquiring.
Away from all this speculative trading, investors that have been on the lookout for value haven’t had many places to turn. The tech sector has been one that’s done particularly well over the last few years. For example, Warren Buffett, one of the world’s most famous value investors, acquired a stake in Apple in the spring of 2016 that has grown sixfold in the years since.
Another industry that’s seen good returns for investors is the iGaming market.
What is iGaming?
iGaming is the term given to companies that offer different forms of wagering online. This includes casino games, sports betting, poker, bingo, lotteries, scratch cards, and even bets on political and financial events.
The industry is relatively young, with the first companies opening their virtual doors in the late 1990s.
Over the decades since, iGaming companies have continually innovated their offerings by introducing new products and new ways to play. The biggest change was the introduction of mobile apps which meant that people could begin placing bets and playing games on the go without the need to be tied to a computer desk.
All forms of digital entertainment have grown in popularity over the last few years. Movie streaming services like Netflix and Amazon Prime Digital have enjoyed huge gains in userbase and watch time. The same has been seen in music streaming, social media, and gaming.
In the last few years, gaming companies have reported larger and larger reviews and profit margins as more and more people start playing games and spending more on them.
iGaming companies have also been riding this wave, as more people make the switch from offline forms of wagering such as in casinos and betting shops. New people have also begun taking up the hobby as it has become more accessible through smartphones.
The biggest growth in iGaming has come from the United States where homegrown brands like DraftKings Sportsbook have begun operating.
The US Offers Huge Opportunities for iGaming Companies
Until 2018, sports betting was pretty much only available in Las Vegas. Then, the US Supreme Court struck down a law that prohibited other states from allowing sportsbooks to operate on their territories.
In the three years that have passed since around two dozen states have legalized sports betting and other forms of iGaming. In these states, billions of dollars are being wagered every year, generating tax revenues for the states and huge profits for the companies involved.
This is still only scratching the surface. More than half of the country still can’t place bets online, though more states are expected to legalize iGaming in the coming months and years. When they do, the size of the market will grow drastically.
Additionally, states like New Jersey and Pennsylvania where iGaming has been possible for longer have seen revenues break records every year since the companies began operating. Therefore, even if no new states come online anytime soon, the American iGaming market will continue to expand at an impressive pace.
With so much room to grow, it’s no surprise that all of the world’s biggest igaming companies are clambering over themselves to begin operating in as many US states as they can. Right now, market share is all that matters, but many investors recognize that there is a lot of potential for bumper profits as things begin to settle in.