Why the commercial gaming market is increasing for casinos

Shawn Bolton - Author

Sep. 5 2014, Published 3:39 p.m. ET

Outperforming the market

Casino gaming is the largest part of the commercial gaming market. It continues to grow in popularity. There has been a surge in demand for casino games. As a result, new casino destinations have been created. Existing casinos have also been expanded. The commercial casino industry is vital to the states and communities where it operates. It creates jobs and business opportunities for local businesses. It also provides direct gaming tax revenues. This stimulates struggling economies and helps communities grow.

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The above graph shows how the Las Vegas Sands (LVS), the DJ U.S. Gambling Index, and the S&P 500 (or SPY) performed since August 2009. LVS and the DJ U.S. Gambling Index have outperformed the S&P 500. However, LVS outperformed the DJ U.S. Gambling Index. LVS had a return of 434% over the last five years. In contrast, the DJ U.S. Gambling Index and the S&P 500 returned 189% and 99%, respectively.

The casino industry seems to thrive quickly. Again, LVS seems to show this clearly. There are so many different casinos in one location. However, each casino is able to attract a customer base. Patrons have other options nearby. This variety makes Las Vegas an attractive market.

Other major players in the casino industry are MGM Resorts (MGM), Melco Crown Entertainment (MPEL), Caesar Entertainment (CZR), and Pinnacle Entertainment (PNK). Improved market performance will continue to have a positive impact on exchange-traded funds (or ETFs) like Consumer Discretionary Select Sector SPDR Fund (XLY) and VanEck Vectors Gaming (or BJK). These ETFs track companies in the leisure industry.


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