3 Stocks To Buy Ahead Of Supreme Court Sports Gambling Case

On Monday, the United States Supreme Court will hear oral arguments in Christie v. NCAA—a case that could eventually lead to legalized sports gambling throughout the U.S.

Outgoing New Jersey Governor Chris Christie has pushed to overturn the Professional and Amateur Sports Protection Act (PASPA). This 1992 statute prohibits states, aside from Nevada and a few others, from implementing sports gambling. Now, the high court is finally set to hand down a decision that could possibly change the entire U.S. gambling landscape.

Betting on professional and collegiate sports is a multibillion-dollar a year industry, yet it is still illegal in most cases. In recent years, NBA commissioner Adam Silver has come out in favor of legalized sports gambling, and other heads of pro leagues have started to join the pro-betting group. However, Roger Goodell has not backed down from his stance that the NFL will not support legalized sports betting, even as a team moves to Las Vegas.

The decision, which is not expected to be announced until the spring, has the NCAA, NFL, NBA, MLB, NHL and casino companies on edge as the slow process begins next week.

With that said, let’s take a look at three casino and gaming stocks that are thriving now, as the betting world readies for a possible industry shakeup down the line.

Wynn Resorts, Limited (NASDAQ:WYNN)

Wynn is currently a Zacks Rank #1 (Strong Buy) and sports an “A” grade for Growth in our Style Scores System. Within the last 60 days, the company has received four upward earnings estimate revisions for its current quarter against no downgrades. Within this same time frame, Wynn earned the same four to zero upgrade ratio for its full-year earnings.

Last quarter, this casino and resort giant’s revenues soared 45.3% to hit $1.61 billion. Wynn Resorts’ third-quarter sales were spurred in part by a 15.3% year-over-year jump in Wynn Macau revenues, which hit $597.4 million.

Wynn’s fourth-quarter EPS is projected to skyrocket 163.34%, based on our current Zacks Consensus Estimates. For the full-year, our estimates are calling for the company’s earnings to climb 57.37%.

In terms of top-line growth, Wynn’s Q4 sales are projected to jump 17.78%. On top of that, full-year revenues are expected to hit $6.16 billion, which would mark a 37.9% year-over-year jump. What’s more, Wynn’s cash flow growth of 11.91% destroys the “Gaming” industry’s 2.97% decline and helps demonstrate the company’s growing cash position.

Shares of Wynn have surged 80.41% this year, blowing away the S&P 500’s 15.51% gain. With this climb, the company’s stock price currently sits right near its 52-week high of $160.00 per share. But if the company can match or top the massive Q4 growth estimates, Wynn should have no problem keeping its hot streak alive.

William Hill plc (OTC:WIMHY)

This U.K.-headquartered sports betting and gaming company is currently Zacks Rank #2 (Buy) and also scores an overall “A” VGM score. Shares of William Hill have skyrocketed almost 22% since the end of October, and the company’s stock price currently sits near its 52-week high of $15.75 per share.

William Hill rocks an “A” grade for Value in our Style Scores system, with the sports gaming company currently trading at 12.28x earnings. This solid P/E ratio marks a massive discount compared to the Gaming industry’s 29.25 average. On top of that, William Hill’s P/B ratio of 2.11 matches its industry’s average.

The company rocks an “A” grade for Growth in our Style Scores system, which its 5.83% full-year EPS growth projection helps to demonstrate. Along with bottom line growth, the company’s sales are projected to grow by 2.71%, based on our consensus estimates. William Hill also offers a solid 3.71% dividend.

This gaming company also stands to gain if sports betting is legalized outside of Vegas, as it currently operates in the U.S and could expand into a number of new states.

Churchill Downs Incorporated (NASDAQ:CHDN)

Churchill Downs is currently a Zacks Rank #2 (Buy). The company’s stock price has skyrocketed 47.39% since the start of the year, which nearly doubles its industry’s average. Shares of this company known for its legendary horse race gained over 6.20% on Thursday and hit a new 52-week high of $235.65 per share.

This big jump came after Churchill Downs, which owns five racetracks and six casinos, announced on Wednesday that it sold its mobile gaming subsidiary, Big Fish Games, for $990 million in an all-cash deal.

Last quarter, Churchill Downs’ Q3 revenues grew 4% year-over-year to hit $314.8 million. On top of that, the company’s net income soared 92% to reach $16.7 million. The company’s Q4 sales are expected to climb 7.87%, based on our Zacks Consensus Estimates. For the full-year, revenues are projected to hit $1.34 billion, which would mark a 2.72% gain.

Our estimates call for CHDN’s EPS to pop 26.47% in its fourth-quarter and 29.27% for the full year. Furthermore, within the last 60 days, Churchill Downs has received one upward earnings estimates revisions for its current quarter against no downgrades. Within this same time frame, the company has also earned two full-year upward revisions.

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