Australia is the world’s most lucrative gambling market. Australians spend over $23 billion a year on gambling. Per adult, that’s biggest in the world – around $1,250! 

Electronic gambling makes up around half, at $12 billion. Casino gambling accounts for $5 billion, racing $3.3 billion and other sports $1 billion. 

The opening of online markets for gambling is bringing about change e.g. Ireland and Finland are moving up in the spending stakes. As other markets open, together with the high smartphone penetration in developed economies, this is likely to be the big area of growth.

Gambling related companies

Electronic: AGI, ALL, AQS

Casino: CWN, SGR, DNA, RCT, SKC, SVH

Lotteries, sports betting: JIN, TAH, TBH

The best performer over the past 52 weeks is Jumbo Interactive (JIN), up 157%, while the worst has been The Betmakers (TBH), down 83%.

What to look for

Structural issues: a shift and an opening of markets in online gambling is seeing a shift of growth from traditional bookies to new entrants. 

Regulatory: changes in licensing requirements. Costs are always a risk in this area.

Scaleability: the higher the scaleability of the business, the easier it is to grow into new markets.

My pick: RCT

Reef Casino Trust owns the Cairns Casino in North Queensland. The trust’s main source of revenue is rent from the Reef Hotel Casino. The trust saw half year revenue up 14%, net profit up 32% and a dividend yield of 8%. With subdued activity, related to the arrest of marketing staff from Crown now subsiding, Reef Casino Trust should benefit from a slow return to normalised flights and activity from China. In terms of risks, the trust holds significant single property ownership risk and increased competition from clubs and hotels in the area of electronic gaming. Its major shareholder, Casinos Austria, owns 42%.