How to Invest in Casinos
While the players in the casino often come up short, the owners of the casino can make a handsome profit from the gamblers who come through their doors. If you want to get in on the action, you can become a part owner of those casinos by purchasing stock in the gaming companies that run them. You can also choose mutual funds that focus on the gaming industry and take a stake in many different casinos across the country and around the world.
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Instructions
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Gaming Mutual Funds
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Contact several low-cost mutual fund companies and request information about the gaming funds they offer. Many mutual fund companies offer funds that specialize in the gaming industry, while others have more diversified funds that invest in a wide range of entertainment venues.
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Review the performance of each fund when you receive the prospectus. These specialized funds can be fairly volatile, and they do not always rise and fall in tandem with the overall stock market.
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Check the expenses of the gaming mutual funds you are considering. Look for a low-cost fund that has a solid track record of performance. Keeping your expenses low allows you to keep more of the money you make. Also look at the turnover ratio of the fund, since this can be an indication of the tax efficiency of the fund. A fund with a high turnover ratio tends to generate higher capital gains, and that could mean higher taxes for you. If you plan to hold the gaming fund in a tax-deferred account like an IRA, this is not an issue, but if the fund is held in a taxable account it could be quite significant.
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Review the most recent annual report for the fund. The annual report details the performance of the fund, but it also provides a list of the companies the fund held at the time the report was printed. This can give you a good idea of what the fund owns, including casinos in the United States and gaming properties overseas.
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Complete the application for the gaming mutual fund you want to invest in and return it to the address on the form. Depending on the fund family you might also be able to open your account online and fund it directly from your bank account via ACH transaction or wire transfer.
Individual Stocks
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Open a brokerage account if you do not already have one. If you are comfortable picking your own casino stocks, you can save a lot of money by using an online discount broker.
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Log on to your account and use the broker's stock screening tools to focus on stocks in the casino industry. Many online brokers provide stock screening tools clients can use to pick and choose stocks in particular industries, including the casino industry.
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Review the list of stocks the screening tool returns, then use the online research tools to check the earnings and profits of each stock. Choose the stocks you want to invest in and go to the trading menu. You can also invest in a number of exchange traded funds, or ETFs, that track the performance of the gaming sector.
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Click on the trading menu and enter the ticker symbol of the casino stock you want to buy. Enter the number of shares you want to purchase, then review the details of your order. Confirm your order to send it for processing.
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Tips & Warnings
Keep copies of all your transaction statements with your tax records. You need to be able to document the purchase price of the casino stocks and funds you buy in order to accurately prepare your tax return and compute your capital gains.
References
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