Good news for the gambling businesses and gambling stocks today: Joe Biden took office as the nation’s 46th president without a hitch.
And a body blow landed against an expansive US Department of Justice interpretation of the Wire Act, which had prevailed under the former president, Donald Trump, and served to hinder interstate gambling agreements.
Gaming stocks with ties to PA
Deeper into the story, we’ll take a look at the last three months of performance for the stocks of several gaming companies with Pennsylvania ties, including:
- Boyd Gaming Corp. ($BYD), which operates Valley Forge Casino
- Penn National Gaming ($PENN), which operates Hollywood Casino, Barstool Sportsbook app and The Meadows Casino
- Caesars Entertainment Inc. ($CZR), which operates Harrah’s Philadelphia and Caesars online
- Rush Street Interactive ($RSI), which operates BetRivers online as well as Rivers Casinos in Philadelphia and Pittsburgh
- MGM Resorts International ($MGM), which operates BetMGM online casino and sportsbook
- DraftKings, Inc. ($DKNG), a DFS company that also now has a sportsbook and online DraftKings Casino
Why is Biden seen as a positive for gambling?
We’ll start with the general before looking at specific stocks. On the surface, Biden being better for gambling perhaps seems counterintuitive.
But that’s the consensus despite the fact that Trump is a former Atlantic City casino owner. Important to note is that three of his properties were taken through bankruptcy an aggregate six times, and he’s long out of the casino business.
By contrast, Biden hails from Delaware, a small state with a modest gambling business overseen by the state’s lottery at three brick-and-mortar facilities. It also has three affiliated online casinos and three land-based sportsbooks, but no online sports wagering.
Despite that, Biden’s win has been a positive for gaming stocks and the gaming business.
But why?
Start with Biden’s attitude toward restrictions on online gambling
The campaign of then-candidate Biden told CDC Gaming Reports that it “doesn’t support adding unnecessary restrictions to the gaming industry like the Trump administration has done.”
According to the Economic Times:
“Biden has said he doesn’t support the Justice Department’s decision last year to reassert provisions of the 1961 Wire Act, a move viewed as a threat to online gambling in the US. The Trump administration’s stance threw a cloud over the fastest-growing part of the industry: online and sports betting. Biden’s harder line on coronavirus restrictions could close casinos again if the pandemic worsens, but his close ties to casino-worker unions could see future stimulus funds directed toward them.”
Also, Law360 believes Biden to be “more industry-friendly,” saying he may support a federalized approach to gaming regulation or some form of model legislation that states can opt into, making expansion smoother, as well as fostering gambling compacts between states.
Add to that Biden’s general stance on the role of the federal government, which would allow for states to make their own decisions on gambling expansion.
Additional states on board for gaming since November election
Of course, it also helps that Maryland, South Dakota and Louisiana also each voted in favor of sports betting in some form this past November.
And New York Gov. Andrew Cuomo‘s recent decision to embrace online sports betting legislation should further accelerate acceptance as more states look for new ways to raise revenue in the COVID-19 economy.
AGA and casino workers upbeat about Biden
The American Gaming Association also sounded a positive note, saying:
“The AGA looks forward to working with the 117th Congress and the Biden administration in the new year to provide tax relief that will save gaming jobs and alleviate costs, liability protections that advance responsible reopening, incentives for reviving travel and tourism, and essential support for tribal nations.”
Biden established ties to casino unions in Nevada, and his economic stimulus plan is seen as a potential lifeline for gaming workers still out of work or with fewer hours due to the virus.
DOJ loses Wire Act appeal as Biden takes office
And finally, back to where we started. The New Hampshire Lottery Commission won its case against the DOJ regarding the 2018 revised opinion on the Wire Act, meaning the 2018 interpretation could be invalidated.
The Trump DOJ held that the Wire Act was applicable to forms of online gambling besides just sports betting, which would include the online sale of lottery tickets.
The expansive position was seen as a favor to Las Vegas Sands owner and Trump megadonor Sheldon Adelson. Adelson died recently.
The uncertainty lingering from the 2018 opinion had slowed a wide array of online gambling, such as multistate online poker networks. With that obstacle lifted, more states are likely to consider joining interstate compacts.
PA gambling stocks get a boost on Inauguration Day
Which brings us to online gambling stocks, many of which saw an uptick on Inauguration Day, Jan. 20. Here, we take a look at the performance of several such stocks with relevance in PA over the past 90 days, as tracked by MarketWatch.
Boyd Gaming
BYD has gained 47.95% over the past three months. The stock opened at $48.02 and closed at $49.14 on Inauguration Day.
Penn National
$PENN has gained 66.88% in three months and continues to achieve new all-time highs. On Wednesday, the stock opened at $104.55 and closed at $106.
Rush Street
RSI, which recently went public on the NYSE, has gained 95.45% in the last three months. It opened Wednesday at $23.64 and closed the day at $25.48.
MGM
MGM has gained 45.40% since mid-October. Today it opened at $30.63 and closed at $31.03.
Caesars
CRZ has gained 53.04% during the past three months. The stock opened the day at $80.40 and closed at $80.06. Its high for the day was $82.34.
DraftKings
DKNG has gained 28.22% in the past three months. It opened Wednesday at $53.93 and closed at $53.18 after hitting a high of $54.10 during the day.
Lead image credit: AP Photo/Evan Vucci
