Gambling stocks fell across the board in 2022, despite Pennsylvania casinos producing record revenue numbers.
Should you buy the dip?
While we aren’t here to provide financial advice, analysts like at least a handful of casino stocks going into 2023. Keep reading to see which ones have a favorable outlook this year, including recent earnings, buy ratings and 12-month target prices.
Notable gambling stocks to watch in Pennsylvania this year
Penn Entertainment, Inc ($PENN)
Penn Entertainment changed its name from Penn National Gaming to represent its expansion from retail casinos to online gaming and sports betting. It has 43 retail properties (casinos and racetracks) in 20 states nationwide, many under its Hollywood Casino brand.
Penn is growing its online sports betting presence, soon to own 100% of Barstool Sports. Barstool Sportsbook is available in 15 states, and its online casino is in four. It opened for business in Maryland (Nov. 23, 2022) and Ohio (Jan. 1, 2023) on the first days each state went live for mobile sports betting.
Beyond Barstool, Penn offers its Hollywood Casino PA online app and is the retail casino partner for some of the largest online casinos in the state, including DraftKings, BetMGM and PointsBet.
2023 $PENN stock outlook
Penn’s stock fell from $52.24 to $29.70 throughout 2022. Most of the damage occurred from January through April, when the price first fell below $30. Its low came in September ($29.08), which brought a charge to $37.80 by mid-November. The stock is now hovering back around $30.
For Q3 2022, Penn’s revenue grew to $1.63 billion (+7.5% YoY), net income was $123.2 million (+43% YoY) and Adjusted EBITDA was $440.4 million (+1.7% YoY).
Looking to 2023, economist Alberto Abaterusso is bullish on Penn. According to Abaterusso, recent earnings data shows a positive trend, and 14 Wall Street analysts produced a moderate buy consensus rating (nine buys, five holds and zero sell ratings).
Average 12-month target price: $48.83
Rush Street Interactive ($RSI)
Rush Street Interactive’s brands of Rivers Casino, BetRivers and Play SugarHouse are well-known within the Keystone State, thanks to its properties in Pittsburgh and Philadelphia. It also owns casinos in Des Plaines, Illinois, Schenectady, New York and Portsmouth, Virginia (opens Jan. 15).
The BetRivers Sportsbook is live in 14 states, also opening on day one in Maryland and Ohio. Other states it launched in 2022 include Louisiana, New Jersey, New York and West Virginia. Kansas will soon become the 15th state in which the sportsbook is available.
BetRivers Casino runs in four states (MI, NJ, PA and WV). Pennsylvanians can also play at SugarHouse Casino.
2023 $RSI stock outlook
Of the five stocks on this list, RSI fell the farthest in 2022. RSI started the year at $16.60 and dropped more than 10% in the first week. The price eventually bottomed at $3.00 on Dec. 20 and has since risen to around $3.75.
So, why is RSI on this list? Net revenue grew 20% YoY in Q3, totaling $148 million, and signs point to its continued growth, fueled additionally by its markets in Ontario, Canada, and Colombia.
Analysts agree, with RSI maintaining a buy rating since November (eight buys, one hold and zero sell ratings).
Average 12-month target price: $9.00
BetMGM ($MGM)
MGM Resorts International operates 29 casinos in the US and Macau. Its online product, BetMGM, is an equally large powerhouse, earning Casino Operator of the Year at the 2022 EGR North America Awards.
BetMGM Sportsbook is live in 19 states, plus Washington, D.C., thanks to Maryland and Ohio’s mobile sports betting launches.
BetMGM Casino is available in four states. Like Rush Street, MGM offers a second PA option, Borgata Casino.
2023 $MGM stock outlook
MGM’s stock dropped in 2022, though less than others here. It opened the year at $45.04 and briefly teased $50 in February, only to fall to a year-low of $27.17 in June. The price climbed back to $33.53 by the end of the year and has since risen above $37.50.
Coupled with MGM’s stock price rebounding in Q3, the company experienced a record $3.4 billion in revenue (+26% YoY), despite MGM China being down 70%.
Things look to continue upward for MGM, with a moderate buy rating (nine buys, five holds and zero sell ratings).
Average 12-month target price: $51.10
DraftKings ($DKNG)
Unlike the other four on this list, DraftKings has no retail casino presence. Its start in daily fantasy sports helped it gain a stronghold as one of the top two online sportsbooks and casinos in Pennsylvania and the US.
Today, DraftKings operates mobile sportsbooks in 20 states after recently expanding into Maryland, Ohio and Kansas. Like many others, DraftKings launched on the first day of online sports betting in all three states. It has retail sportsbooks in two more states.
DraftKings Casino is available in five states, including Connecticut, where it holds one of just two licenses.
2023 $DKNG stock outlook
DraftKings stock took a significant hit in 2022, opening the year at $27.84. The price dropped to $10.27 by May 11, rallied above $20 by mid-August and fell back to $11.39 to close the year. It currently sits around $12.
For Q3 2022, DraftKings reported revenue of $502 million (+136% YoY). Its Adjusted EBITDA was -$264 million (+19% YoY). The company expects to reach positive Adjusted EBITDA by Q4 2023.
Analysts have mixed outlooks for $DKNG in 2023. Out of 27 analysts, 15 have a buy rating on the stock, with nine holds and three sells. Citi analyst Jason Bazinet has a buy rating and $24 target price, citing attractive possible rewards relative to risk.
Average 12-month target price: $21.96
Caesars ($CZR)
Caesars is another established casino giant with more than 50 properties in 16 states. It is prioritizing online casino and sportsbook expansion, with mobile sportsbook access in 16 states and Washington, D.C.
In addition to Ohio (2023) and Maryland, Caesars went live in New York and Louisiana in 2022. Caesars online casino operates in four states.
2023 $CZR stock outlook
In 2022, Caesars’ stock lost half its value, opening at $93.49 and closing at $41.60. The low point came later than others, hitting $32.26 in September.
It is another stock that could bounce back, though. InsiderMonkey rated Caesars as the top gambling stock to buy right now.
Q3 earnings were 24 cents per share, compared to -$1.08 in 2022. Revenue was $2.9 billion (+7.4%) with an Adjusted EBITDA of $1 billion (+13.6%).
Wells Fargo analyst Daniel Politzer believes the solid Q3 performance indicates a strong company moving forward, and he adjusted his target price accordingly, up to $72. It has a moderate buy rating (nine buys, three holds and two sell ratings).
Average 12-month target price: $71.47
