Will Feb. 4 be “The Greatest Day in Stock Market History” as Sports Gambling Explodes?

By Travis Johnson, Stock Gumshoe, December 4, 2018

This is the intro that drove a lot of readers to send in questions this week:

“The Greatest Day in Stock Market History

“Thanks to Supreme Court Order 16-476, over $4 billion could move into three very specific stocks—on one day, Feb. 4, 2019.

“If you invest now, you could ride share prices up 3x, 4x—even 10x—in a single day.”

The ad is from E.B. Tucker for Casey’s Strategic Investor (currently $49/year, renews at $129), and it’s all about sports gambling — which is now a state issue again, after the Supreme Court responded to New Jersey’s long-running lawsuit and finally overturned the old prohibition that grandfathered in only Nevada as a legal sports gambling state.

We’ve seen teaser pitches about gambling before, and the pending legalization in a bunch of states that immediately jumped to pass legislation allowing sports books was widely covered in the investment world as an obvious possible boon to various casino operators… but now we’re getting the promise that these favored stocks will surge higher on a single day, the Monday after the Super Bowl, and that E.B. Tucker has identified the best bets.

More from the ad:

“… in the space of 24 hours, the three obscure companies I’m talking about could collect the lion’s share of over $4.7 billion added to their bottom line….

“… the billions predicted to flow into those stocks on that day are thanks in part to a plan the NFL hatched to save pro football.”

Huh? The NFL is indeed the most popular sport both for viewing and for gambling… and it has been in a little bit of a decline in recent years, though it has come back this year after recovering from the negative press and backlash from the concussion epidemic and the anthem kneeling controversies. Part of this is probably just trying to appeal to the 60 year old grumpy white guy in most of us, since that’s who most investment newsletters are sold to…

“It’s hard to tell if the NFL is past the point of no return in America… The signs are starting to show a permanent decline.

“But the league has one set of hard-core fans who are only growing in number: gamblers.

“In fact, league research shows the massive impact illegal gambling has on viewership:

“It increased engagement by 300%.”

And Tucker’s trying to draw this in to create his artificial February 4 deadline — since the NFL is the big dog of gambling, and since the Super Bowl is the biggest event of the year, then Super Bowl wagering should fatten the bottom lines of the various legal bookmakers nicely. More from the ad:

“With the American Gaming Association saying Americans ‘bet $4.7 billion on Super Bowl 51… yet 97 percent of bets—approximately $4.5 billion—[were] bet illegally due to a failed federal ban signed into law in 1992.’

“But thanks to the new Supreme Court ruling, all that is about to change.

“Because Super Bowl 53 will mark an historic milestone in our nation…

“The unofficial end of America’s third prohibition… and the first time since 1992 that folks can legally bet on the big game in places other than Vegas….

“And if you’re a part of the small group of investors who buy into the shares of three specific companies now, you could double your money on that day. And that’s just the start.”

Tucker notes that this legalization should spread pretty quickly:

“New Jersey is just one state that could soon be raking in billions thanks to legalized sports gambling. With some industry experts predicting that sports gambling in Jersey will soon surpass the $4.8 billion bet annually in Nevada…

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“… there will be more upside for years to come as an estimated 32 states introduce sports betting.”

And he throws out some forecasts:

“It’s hard to know for sure how big the sports betting market will become. But research from the University of Nevada, Las Vegas, suggests that the illegal sports betting industry is turning over $150 billion a year. That’s more than the GDP of Nebraska.

“My own research shows that the market should turn out to be even larger than that. Markets the government has outlawed always get bigger when they become legal again….

“Now that it can be legally out in the open, I expect the industry to hit $250 billion in the next few years.”

And then we get to the “what stocks to buy” bit… here’s part of his argument:

“Investors may assume that the biggest beneficiaries of sports betting will be the Las Vegas casinos. That couldn’t be more wrong.

“Sports betting has been legal in Nevada for years. Last year, the state earned about $250 million from sports betting. So even with this new Supreme Court decision, it’s business as usual for Las Vegas. The ruling won’t hurt. But it won’t cause the casinos there to see a spike in betting….

“The place to start your investment research is with legal casinos in states that previously outlawed sports betting.

“There are about 1,000 casinos across the U.S. Some are tribal casinos. Others are legal commercial casinos
and card rooms.

“Depending on local laws, these can already have a variety of card games and slot machines. But if they’re in a state that had previously outlawed sports betting, they’re now looking at a new source of revenue….

“Right now, I’m looking at casinos in Pennsylvania, West Virginia, and Rhode Island. These are states that already have sports betting legislation on the books. Local casinos there will profit the most from legal sports betting.”