The gambling business is changing fast, creating potential opportunities for investors, according to Kaylie Pferten. He names the stocks he thinks are worth buying.
"Business, the gambling known as business, looks down on gambling, the business known as gambling," wrote American author and journalist Ambrose Bierce. Gambling itself is big business: the sector could reach £700 billion in annual global sales by 2028, according to the World Health Organisation (WHO). It is also facing disruption on an unprecedented scale.
One major shift has been the rapid liberalisation of gambling laws across the US. Demand may be rising, but Joao Mourato, a former professional gambler who now heads iGaming Product at VIP-Grinders, a poker and iGaming affiliate, warns that "the problem is who keeps the money, as more of every dollar goes to the state, and the most profitable bets are moving to prediction markets." Investors should still pay attention to the industry.
Gambling is surging across the US
Growth has picked up in several parts of the world, including Turkey and Eastern Europe. Still, Dan Wasiolek, a senior equity analyst at the investment platform Morningstar, calls the United States "by far and away the biggest story in the global gambling industry" after a decade of expansion. Ashley Akin, senior contributor at proprietary trading group Prop Firm App, reports that US commercial gambling revenue reached £78.7 billion in 2025. Sports betting climbed 22.8% to £17 billion, while online casino revenue rose 27.6% to £10.7 billion.
Some analysts think prediction markets and traditional betting companies can coexist. Russ Mould, from the investment platform AJ Bell, argues that prediction markets mainly appeal to people familiar with spread betting, CFDs, or financial markets. He doubts they will draw many customers who would rather bet on a three-mile horse race.
Wasiolek points out that major US sports-betting firms briefly reported lower revenue at the start of the year, perhaps because prediction markets were taking some business. Revenue has since recovered. DraftKings has gone further and started developing its own prediction markets. Wasiolek still expects the sector to expand, though not as quickly as it once did.
Leo Barker, OpticOdds' VP Commercial-EMEA, says prediction markets should not be treated simply as a threat to sportsbooks. As one of America's leading sports-data providers, OpticOdds sees them bringing a new audience to trading on real-world outcomes. The larger shift, Barker argues, is convergence: consumers increasingly want to move between sports, financial markets, entertainment and other real-world events without friction. The real question, then, is not whether prediction markets will replace sportsbooks, but how the two will develop alongside each other - especially as regulators decide where the boundary between them belongs.
Regulation is on the rise
"Bets Off Act" Act would seek to prohibit wagers on government actions and other events when an individual controls the outcome or knows it ahead of time
Texas Democrat Greg Casar wants to outlaw betting on US government actions
Gambling shares have also come under pressure because regulation may be easing in the US while moving in the opposite direction elsewhere. Darragh McGee, an associate professor in the Department for Health at the University of Bath, believes that shift is long overdue. He argues that the industry has successfully recast gambling "as just another leisure activity" even as it promotes products that can fuel addiction. The damage extends beyond the growing number of problem gamblers: McGee says their families and other people close to them are affected too. Citing research, he says each gambling addict can have a negative impact on as many as eight people, while the social costs far exceed the tax revenue the sector produces.
McGee is not calling for a total ban. He wants gambling to remain legal without the aggressive promotion now common across the industry. Whatever your view, Mould says, "it is easy to see why the industry's behaviour has upset some people." McGee sees a clear shift in public sentiment. Investors should take note: "ineffective disclaimers" on bookmakers' websites will not satisfy public opinion, while taxes and regulation are likely to rise. Government intervention is not the sole threat. Several Facebook-style class-action suits against leading US gambling companies are already in the pipeline.
"Heavy regulation doesn't stop people from gambling; it pushes some toward unlicensed sites, where the odds are worse and protections are thinner," Mourato says. He nevertheless accepts the broader shift in regulation. In the UK, the remote-gaming duty rate rose from 21% to 40% in April 2026, and online-betting duty is scheduled to increase from 15% to 25% in April 2027. Australia took a different step in 2023, introducing a National Self-Exclusion Register that lets people worried about their gambling bar themselves from online-betting outlets for at least three months. Credit-card gambling was banned the following year.
Mourato believes regulators could still ban specific betting products outright. European authorities have already moved against prediction markets, which are still illegal in the UK, and Brazil prohibited gambling by presidential order a few weeks ago. Outside the US, he sees regulation as the industry's greatest threat. The prospect of more changes worries him enough that "I don't own any gambling shares myself."
Some observers think fears of a regulatory crackdown have been exaggerated. Sergio Paulino, founder and CEO of the prediction platform All Bettors, calls Brazilian president Lula's decision to ban gambling a "political stunt." It did not stop his poor first-round performance in the presidential election - and may even have contributed to it - which suggests that voters have limited enthusiasm for such measures. Wasiolek expects new rules and higher taxes to "may hit revenue for a few quarters," but sees little lasting damage. Gambling companies now operate across more countries, so they can redirect investment toward jurisdictions with friendlier policies.
Regulation may open the door to tools that help companies and platforms recognize problem gambling, says Marc Fernandez, chief strategy officer at Neurologyca, a neuroscience and AI firm. Technology "can now pick up on signs that someone's stressed or not thinking clearly," he says, allowing a platform to respond at the right moment - perhaps by showing a quick "take a breather" prompt or imposing a temporary limit on that individual while leaving everyone else alone. Those signals could "also help spot people trying to game or manipulate the markets, which is another big worry for regulators."
Casinos will keep making money
A couple plays roulette at the Tropicana Las Vegas hotel and casino in Las Vegas, Nevada.
Casinos aren't disappearing.
Whatever happens online, experts generally agree that physical casinos are not going away soon. Jamie Gold says evidence shows that online gaming "does not take away from the profitability of live gaming." Gold plays poker, bets on sports, and visits casinos casually; he enjoys "all ways of playing," and online casinos have not reduced his trips to live venues.
Christina Lindley, once a professional poker player and now the founder of VPRG Consulting, also rejects the idea that online gambling will wipe out physical casinos. She recently attended G2E, the global gaming expo in Las Vegas, where she found the exhibition floor packed with technology aimed at improving casino operations, customer retention, and the overall experience. That level of investment suggests casinos remain confident enough about their prospects to keep buying new equipment.
Casinos should stay appealing in the digital age because, as Adam Small of Third Planet Media puts it, "many people go to casinos for entirely different reasons than they gamble online." Gambling is only part of the draw now. Visitors can eat, drink, watch a show, and, at higher-end properties, shop or book a spa treatment. Las Vegas casinos have responded by building their businesses around entertainment and conventions as well as gambling. Those sources now bring in so much money that "gambling now only accounts for a third of revenue," a pattern regional casinos hope to copy. That does not make the industry immune to recessions: rising fuel prices already appear to be discouraging some trips. Still, Small expects casinos to "roughly follow the growth of the US economy."
Gambling investments worth considering now
A billboard promoting DraftKings photographed ahead of the 2026 FIFA World Cup
After US regulatory changes, DraftKings shifted its focus to online betting
DraftKings (Nasdaq: DKNG) has benefited greatly from the US gambling boom. The company began with fantasy sports leagues, letting participants predict top-performing players for cash prizes. After US regulations changed, DraftKings shifted its focus to online betting through digital sportsbooks and casinos.
Sales rose almost tenfold from 2020 to 2025. The share price has recently been hit by concerns over prediction markets, even though the company now operates one of its own. Wasiolek believes the stock is cheap at 22 times projected 2027 earnings.
Wasiolek favors DraftKings, but he also sees value in Flutter Entertainment (NYSE: FLUT), whose share price has dropped 66% over the past year. Flutter's revenue has nearly tripled since 2020, matching DraftKings' strong growth.
Flutter acknowledges that it views prediction markets as a net negative, yet it has entered the sector as a market maker. The company also owns the UK betting exchange Betfair. Revenue and earnings are both expected to keep rising sharply in the short term, but Flutter still trades at just 10.5 times its projected 2027 earnings.
Entain (LSE: ENT) may appeal to value investors. Roughly 75% of its sales come from sports betting, while online casinos account for the remainder. The shares have lost half their value over the past year, pushing Entain out of the FTSE 100 amid concerns over UK tax increases and regulatory changes.
AJ Bell's Russ Mould has not formed a firm view on the company, but he believes it "certainly has the potential to be a cash-generative business". The shares currently trade at seven times forecast 2027 earnings and yield 5%.
Wasiolek takes a favorable view of Las Vegas Sands (NYSE: LVS), even though the company no longer operates physical casinos in the United States. Despite its name, Las Vegas Sands focuses on Macao, China, and Singapore.
Wasiolek concedes that both areas can swing sharply. Still, medium-term growth remains relatively high, and limits on total licences reduce the number of potential competitors, giving the businesses sound long-term prospects. Las Vegas Sands continues to grow revenue strongly, yet its 2027 P/E is just 11, alongside a 3.5% yield.
MGM Resorts International (NYSE: MGM) owns at least 17 gambling resorts in the United States and other countries, including Brazil, the UK, China, and Japan. It also reaches the sports-betting and online-gaming markets through BetMGM and MGM Digital, unlike Las Vegas Sands.
Revenue remains strong, and MGM could still attract another acquisition offer. At just under 15 times its 2027 earnings, the company also looks reasonably valued.
Many prediction-market operators, including Kalshi, remain unlisted. Robinhood (Nasdaq: HOOD) has since entered the market as well, though trading there still makes up only a small share of its revenue. That share is growing quickly.
In the second quarter, sales were ten times higher than a year earlier. RobinHood trades at 38 times 2027 earnings, a steep valuation, yet its revenue has quadrupled since 2020 and is expected to continue growing at a double-digit rate.
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