Gambling is regarded as recession proof. The ASX offers numerous offers to give portfolios a winning edge.
-Research suggests households don't consider buying lottery tickets a luxury or even discretionary
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-Gambling, in all its forms, is big business
-Multiple ASX-listed companies offer exposure
With the dreaded 'R-word' (recession) caked across headlines, many investors could, understandably, be getting cold feet and apprehensive on where to find value in the share market.
As a result, most prudent investors pour into defensive sectors such as consumer staples, healthcare and utilities. However, for those with a little bit of imagination, there are other avenues for growth despite these bread and butter recessionary stalwarts.
Since time immemorial, the gambling industry has long been regarded as a recession proof sector and the Australian equities market provides plenty of opportunities to give portfolios a winning edge.
Time immemorial
Given the recent tightening in current economic conditions, many consumers may be thinking twice about ordering their next smashed avo on toast. The same is not by default true for consumers and their weekly lottery ticket.
A study from the
This theory has been reinforced by a survey conducted by
There are several theorisations which aim to explain this phenomenon in consumer behaviour that gives the lottery and gambling its enduring appeal. Namely, most households don't perceive their weekly lotto pickings as a form of gambling and the outlay seems relatively modest compared to the potential reward.
In
The industry itself has grown significantly in recent years, driven by factors such as rising consumer demand, technological advancements, and liberalisation of gambling regulations. In addition to traditional gaming machines (pokies), growth in the sector has also been fuelled by the increasing popularity of online gambling, the expansion of the sports betting market and the introduction of new technologies, such as mobile apps and virtual reality.
For those inclined on 'taking a punt', the ASX offers a smorgasbord of options to add sector exposure to the investment portfolio.
For the punters
In addition to retail outlets, the company offers digital platforms for its betting services. Earlier this year, Tabcrop revealed an 11% increase in its half-year report and made its intentions clear to further reduce costs and improve its digital market share. The company's 'TAB25' drive included the ambitious target of increasing its digital market share from 25% to 30% by 2025, whilst also slashing capex by -
Having split from
Pointsbet Holdings ((PBH)) is the only pure-play sports bookie listed on the ASX. Despite announcing a 52% increase in revenue for FY22, the company incurred huge losses in its attempt to penetrate the lucrative US betting market. That ambition has changed since two foreign buyers approached the board with the intent of purchasing those loss-making US operations.
As things stand, it looks like Fanatics Betting and Gaming might hold the upper hand in this two-horse contest. Once a deal is concluded,
Cut from the same cloth is
In terms of electronic gaming machine makers, the ASX has two notable candidates in big brother Aristocrat Leisure ((ALL)) and little brother Ainsworth Game Technology ((AGI)).
Both companies manufacture and supply the electronic gaming machines (pokies) you find in pubs, clubs and casinos. In addition to these traditional machines, both companies have also started to foray into mobile gambling applications and online real money games (RMG).
Most recently, Aristocrat completed a
On a slightly different note, investors might see value in entertainment companies owning casino operations to bolster their broader business activities. The most prominent names locally include
Both Australian companies operate traditional and digital gaming businesses to supplement their other entertainment offerings which include hotels, restaurants and bars. SkyCity
AUSTRAC announced civil penalty proceedings in the Federal Court against
While there's always the risk authorities in
Bet with your head
Although there are many factors that make the gambling industry a sticky part of Australian culture, there are several shortcomings.
Although the sector has experienced significant growth in recent years, the long-term sustainability of this growth will depend on factors such as changing consumer preferences, regulatory developments, and the social and economic impacts of gambling.
The gambling industry in
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