Casinos Are Feeling the Heat, But We’re Putting Our Money on a Recent Winner
With the proliferation of online gambling companies like DraftKings ($DKNG) and Flutter Entertainment ($FLUT), parent company of FanDuel, you’d think that brick-and-mortar casinos would be in full retreat.
Vegas is feeling the heat. According to the Nevada Gaming Control Board, casinos on the Las Vegas strip generated net income of $154.2 million in 2025, a shocking decline of 81.2% from the previous year.
Critics say Vegas’ wounds are self-infllicted. Casinos on the strip got carried away with resort fees, paid parking, and room pricing, driving business to competitors downtown.
Meanwhile, in Atlantic City, casino profits fell 22.9% during the first quarter of this year. Winter is never a good time to visit the Jersey Shore, but this year was particularly inhospitable.
Despite these conditions, not all casino stocks are suffering.
Winners and Losers
In the world of casinos, there are always winners and losers. One stock in particular stands out as a potential winner right now.
Penn Entertainment ($PENN) is enjoying a solid rally, gaining 47% year-to-date. The stock has been particularly hot lately, with a 32% gain over just the past month.
This is a small company, with a market capitalization of just under $3 billion. Penn Entertainment owns 42 casinos and racetracks across the U.S., mostly in the Midwest.
Charting Penn Entertainment
Penn Entertainment has formed a bull channel (black lines), consisting of a series of higher lows (HL) and higher highs (HH). The stock is currently overbought, according to its RSI (relative strength index) indicator.
The stock’s rising 50-day (blue) and 200-day (red) moving averages recently crossed, a bullish indicator (circled).
A pullback to the center of the channel, to the $20 area, would make an ideal entry point.
Penn Entertainment is hot because the casino sector is going through a period of consolidation right now. With a market cap of just $2.92 billion, Penn could become a target.
MGM Resorts on the Block
Like Penn Entertainment, MGM Resorts ($MGM) has also been on a hot streak lately. MGM has gained over 31% so far this year, with most of that gain coming over the past month.
MGM’s rally is due to an $18 billion all-cash buyout offer from an investment group led by Barry Diller. The deal values MGM at about $48.30 per share. Diller already owns 26,1% of the company’s shares.
Render Unto Caesar
MGM isn’t the only casino catching a bid. Last month, Caesar’s Entertainment ($CZR) agreed to be acquired by Fertitta Entertainment for $17.6 billion.
Bottom Line
Ceasar’s Entertainment has agreed to be acquired for $17.6 billion. MGM Resorts might soon be purchased for $18 million.
Penn Entertainment could be acquired for far less than either of those names. It offers a diversified brick-and-mortar portfolio, and is growing quickly in the online gambling space.
Buyers are clearly shopping in this sector, and properties are disappearing quickly. We’re entering a half-sized position in Penn Entertainment at market, and looking to purchase the other half on a pullback to the $20 area.
At the time of publication, Ponsi was long PENN.
