Wednesday, January 13, 2016

Gaming and Racing Stock Index Trounces Stock Market in 2015

Horse Racing FLA’s index of gaming and racing stocks essentially went gate-to-wire last year, increasing +23.7%. A fine performance indeed, relative to the broad stock market indexes barely in-the-money for 2015.

Our 12-stock index was created January 1, 2015 as an offshoot of following the five publicly-traded companies in the thoroughbred racing business in North America. Penn National Gaming, Canterbury Park Holding Corp., Eldorado Resorts, Inc., Boyd Gaming, and Churchill Downs, Inc. operate horse racing tracks, while the remaining 7 stocks have interests in running resort hotels, providing on-site gaming, wagering, and simulcasting, or are suppliers to the gaming / track operators.

Last year, eight stocks in our index were positive performers, while 4 lost money. The four losers were big: Wynn Resorts and Caesars lost half their value, Las Vegas Sands fell 25%, and the Gaming exchange-traded fund, BJK was 18% lower.

The eight winning equity wagers ranged in price increases from MGM’s +6% to Eldorado Resorts’ monster gain of 171%. The five stocks followed that operate thoroughbred racetracks* gained +60% on average. Boyd Gaming gained 55%, Churchill Downs gained 48%, Penn National, up 17%, and Canterbury Park Holdings popped 10%. All figures do not include any dividends that may have been received.

As with any stock, or index of stocks, the trajectory up or down rarely occurs along a nice sloping pattern. Through early July, the index gained about 20%, then lost about 4% for 3-1/2 months until late September, our last reporting to you. Then they finished the year with a strong fourth quarter, up about 7%.

It’s also important as an investor – similar to a multiple-race wager – that you have to have a game plan. To achieve the results we’re reporting, you had to buy equal dollar amounts of each of the 12 stocks. If you pick and choose, you’ll have very different results.

What’s in store for this year? We’re weary of the same or similar performance in our index again this year. There are lots of factors outside of the racetrack operators control: legislative (as in decoupling here in Florida); economic, and the weather. From our perch here in South Florida and our one-year analysis of these stocks, it does seem that people in general are wired for fun in good times and bad, and activities that take their mind off of life’s worries with a chance to win some long-green may bode well for pari-mutuel and casino gaming into the future, not to mention the states’ treasuries. 

Tonight’s nation-wide Powerball lottery drawing is a testament to this opinion. The $1.5 Billion jackpot prize is up for grabs for a lucky few gamblers. 

* Canterbury Park Holding Corp.’s only property is thoroughbred track Canterbury Park Racetrack and Card Casino in Shakopee, Minn.

Churchill Downs Inc. owns Churchill Downs in Louisville, Ky., Arlington Park in Arlington Heights, Ill., Fair Grounds in New Orleans, La., and Calder Casino & Race Course in Miami Gardens, Fla.

Penn National owns Penn National in Grantsville, Pa.; Mahoning Valley Race Course in Austintown, Pa.;

Charles Town Racing and Slots in Charles Town, W. Va.; and Sam Houston Race Course in Houston, Tex.

El Dorado Resorts owns Presque Isle Downs in Erie, Pa.; and Mountaineer Resort and Race Track in Chester, W. Va. Boyd Gaming owns Delta Downs and Evangeline Downs – both in Louisiana.

Gaming and Racing Stock Index Trounces Stock Market in 2015

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HorseRacing FLA staff