What will drive gaming revenue in the future? Millennials. And where will much of the growth come from? Online gambling. Millennials are the first official generation that were born into the digital age; couple that with smartphones, and that makes for a heck of a powerful combination.
The new era of gambling is on the verge of breaking out, with technologically enabled gambling allowing participants to play poker, blackjack and daily fantasy sports games on the rise. Services such as Casino and LeoVegas are making their name in the skill-based gaming market specifically targeting the millennial generation. And while on the ropes last year, there may be a path forward for daily fantasy sites DraftKings and FanDuel.
But public companies with established gaming businesses are also starting to pivot to this new opportunity -- and that's where investors should concentrate their attention.
Wynn Resorts (WYNN) - Get Report , for instance, in January opened its Encore Player's Club in Las Vegas, which has a separate space for gamblers to hang out with their friends and watch sports events, and is targeted at millennials.
The company's stock has outperformed beyond expectations recently, rising more than 6% since reaching a 17-year intraday low of $49.95 on Jan. 14. It is trading above both the 50-day average and 10-week line.
Another casino stock to consider is Las Vegas Sands(LVS) - Get Report , which last year made minor changes to a casino in Pennsylvania in an attempt to attract millennials. The company featured a "stadium" of a staggering 150 live dealer electronics games at its Sands Bethlehem location.
The company's stock has surged 47% from its Jan. 20 low and trades now at about $52. Las Vegas Sands boasts expanding profit margins, positive growth and a reasonable amount of debt.
As online gaming continues to expand its market share, smart casino companies that look at the trends and adapt stand to benefit.
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.