The gambling industry in the United States and globally has made quite a few big strides over the last few years. There were deals from virtually every big name, involving Flutter Entertainment, Caesars, William Hill, and others. As online sports betting stocks seem to be surging, along with interest in them, many consumers are turning to see if buying now would not be to their portfolio’s advantage.
Mad Money Host Tells Stock Enthusiast to Wait
Before you buy, though, CNBC Mad Money host Jim Cramer advises you to actually curb your enthusiasm. As it turns out, Cramer believes the gaming industry is too competitive and perhaps just a smidgeon overcrowded. However, not all is lost.
“Until we see fewer promotional deals and more M&A deals, these online sports gambling stocks are very difficult to own,” Cramer says.
He acknowledged that his opinion now is the opposite of what was the popular belief in most of 2021 when investors were urged to snaffle up as much stock on the cheap and wait for it to mature nicely.
However, this change of attitude is based on reality. Right now, Cramer says, there is a lot of competition for market share which yields very little in the way of profits.
Cramer believes that stocks by industry cohorts such as FanDuel, Flutter Entertainment, DraftKings, Penn National Gaming, Caesars Entertainment, and Rush Street Interactive have lost much of their momentum. He continued:
“Too bad because profits are what this market wants right now. That’s why every single one of these stocks has been obliterated.”
Stocks Obliterated? Perhaps Not for Long
His comments come at a time when another market in the United States is launching with news breaking that New York is now a fully operational and legal online betting state since Saturday, January 7.
Cramer issued his outlook for 2022 not so much to crimp expectations about the online betting market, but rather to offer a sobering analysis of what investments people should pursue. He did acknowledge that the competition in New York would benefit regular sports fans.
With three companies burning through a lot of cash to secure the biggest market share possible, Cramer suggested that when all nine companies come online, people would be looking at some very worthwhile betting options. However, his advice remained unchanged.
“Before you can think about buying the sports gambling stocks, I think we do need to see consolidation. We need to see some companies taken out,” he concluded. It seems that when the dust of the M&A rush settles, those who own the remaining stocks would be the real winners. Alternatively, Crammer suggests, we may as well just wait for these deals to go through.