Bet on the future of gambling

By John Del Vecchio  |  September 21, 2018

“Show me the money!”

That’s the most recognizable quote from the movie Jerry McGuire, and it’s as good a phrase as any to sum up the business of professional football over the past couple of decades.

Because it is “all about the Benjamins” all the time.

The NFL is rolling in cash. The “No Fun League” banked about $14 billion in revenue for 2017, which is more than the gross domestic product of 60 countries.

Revenue is growing despite a nosedive for TV ratings and a national controversy over anthem protests that’s drawing attention from the action on the field.

Franchise values keep rising, with the Carolina Panthers recently selling for $2.3 billion. Heck, even the Cleveland Browns, who have won just one of their last 34 games, are worth an eye-popping $1.95 billion, according to Forbes.

That’s a ton of money for a laughably awful football team. Last night, they won their first game in 635 days.

The league’s embarrassment of riches is that way because it chases every possible revenue stream. Old ones are indeed threatened. But there are always new ones to exploit.

And, cash flows and profits are about to get juiced with the expansion of legalized gambling.

Famed rating agency Nielsen projects that the NFL stands to reap a whopping $2.3 billion annually from gambling.

It expects more sponsorships, higher data fees, increased competition for media rights, and greater ticket sales – all due to the added excitement for fans.

And the league is getting a piece of the action, too.

The rich get richer, eh?

Well, this cash windfall will also be good for the Hidden Profits portfolio.

One of our recent recommendations is a solid, name-brand operator in the casino business. It diverts substantial cash flow into artificial intelligence and other technologies with an eye on making it as easy as possible to place any kind of bet.

These investments could pay off big time in the near future.

You see, up until now, potential betting activity on a specific sporting event has been fairly limited. A gambler might bet on the outcome of the game or the first or second half of play. Maybe the total points scored by one or both teams…

In games that capture wider attention, like the Super Bowl, there’s often a long list of proposition (“prop”) bets. It includes such “betable” questions as “who will win the coin toss?” or “how long will the halftime show will last?”

Thanks to more lenient laws and the near-ubiquity of smart phones, every Sunday is going to be this “Super” sooner rather than later. Betting shops will be able to push opportunities to more and more viewers on their mobile device as the game unfolds.

Does the team go for it on fourth and one? Does the kicker miss the field goal?

The combination of massive amounts of available data (how often does the kicker make a 30-yard field goal from the right hash mark with the wind blowing in at less than 18 miles per hour?) with instant access to the customer will ultimately provide the opportunity for a lot more action on games.

Viewership will increase along with the money on the line.

All that new attention and all these new ways to participate are going to generate a lot of transactions. And that’s great for another Hidden Profitsrecommendation.

This one has roots in blockchain technology.

Finally, my October recommendation operates on the technology side of the gaming space. I once shorted it and made a tidy profit.

But, now, I’m bullish.

Trends emerging in the digital gaming space will create more value than any prior cycle.

No matter what, legalized gambling in the digital age will foster plenty of innovation and disruption.

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John Del Vecchio

John Del Vecchio is the author of the bestselling book, Rule of 72: Compound Your Money and Uncover Hidden Stock Profits and What’s Behind The Numbers: A Guide To Exposing Financial Chicanery And Avoiding Huge Losses In Your Portfolio.

As the in-house stock market guru and forensic accountant for Dent Research, John stood on the shoulders of the great David Tice, James O’Shaughnessy and Dr. Howard Schilit, and built a framework of algorithms and a multi-factor grading system that has made him one of the more successful short-sellers around.

John is also the executive editor of our Hidden Profits newsletter and our trading service Small Cap All-Stars.

He graduated Summa Cum Laude from Bryant College with a B.S. in Finance and was awarded Beta Gamma Sigma honors. He earned the right to use the Chartered Financial Analyst designation in September 2001.MORE FROM AUTHOR