For many years, the arena of gaming equities was primarily controlled by casino stocks and, to a lesser degree, suppliers. In recent years, this has shifted due to major inputs from real estate firms and online sports wagering. 

In the realm of publicly listed casino landlords, there are only two names — VICI Properties (NYSE: VICI) and Gaming and Leisure Properties (NASDAQ: GLPI). These real estate investment trusts (REITs) are offshoots of casino operators. VICI was spun off from Caesars Entertainment (NASDAQ: CZR), whereas Gaming and Leisure was separated from Penn Entertainment (NASDAQ: PENN). 

Their business approach attracts numerous investors. Neither REIT depends on casino attendance or unfortunate outcomes for players at the tables. Instead, they receive rent, and that rent must be paid; tenants (gaming companies) risk considerable harm to their credit ratings. Moreover, it is the tenants — rather than GLPI or VICI — who are accountable for improvements and upkeep at the properties.

"In 2023 alone , VICI's revenure surged by 35.8%, largely thanks to its aggressive acquisition strategy,” noted Drew Anderson, product analyst at VanEck. “They’re not just snapping up casinos either — VICI has diversified its revenue streams beyond traditional gaming activities, scooping up assets like Bowlero bowling centers and the Chelsea Piers complex in New York.”

VICI is the biggest owner of casino real estate on the Las Vegas Strip, possessing the property assets of legendary locations like Caesars Palace, MGM Grand, and the Venetian. 

Additional Advantages of Casino Real Estate Stocks 

Gaming and Leisure along with VICI provide investors additional possible advantages. The wider realm of REITs is frequently preferred by market players during periods of rising inflation, like in 2022 and 2023, since property owners typically incorporate inflation adjustments into lease agreements, a pattern that holds true for gaming REITs. 

Furthermore, all types of REITs are sensitive to interest rates, which means their stocks frequently move opposite to rate changes. After a reduction of 50 basis points in September, the Federal Reserve decreased rates by 25 basis points earlier this week. Next, there are the extensive leases that gaming firms enter into with entities such as GLPI and VICI. This simplifies the prediction of upcoming profits and cash flow for analysts and investors. 

“These long-term leases ensure that the tenants (the casino operators) are responsible for virtually all expenses, from taxes to maintenance. Rent escalation clauses are also baked into lease agreements, which means GLPI and VICI sit back and collect steady rent checks, giving them a predictable revenue stream that’s less volatile than the ups and downs of daily gaming activity,” added Anderson.

VICI and Gaming and Leisure have excelled compared to Caesars and Penn since their separation from those casino firms. 

Online Sports Wagering a Leader in Growth 

Following the 2018 Supreme Court decision regarding the Professional and Amateur Sports Protection Act (PASPA), 39 states along with Washington, DC have legalized various forms of sports betting, boosting interest in stocks like DraftKings (NASDAQ: DKNG) and FanDuel's parent company Flutter Entertainment (NYSE: FLUT). 

Currently, these two firms maintain a duopoly in the American sports betting market, which has surged due to numerous states allowing mobile and online gambling, implying that trips to physical sportsbooks are unnecessary. 

“The internet has fundamentally reshaped gambling, and the old stereotype of gamblers traveling to casinos is becoming increasingly outdated,” observed Anderson. “Sports media outlets cover the betting odds of every event. With the rapid expansion of online gaming and sports betting, the action has moved from the neon-lit Strip to the palm of your hand.”

The chart above shows that online gambling is on the rise and this trend is likely to persist, especially if more states legalize iGaming along with sports betting.