3 Gaming Stocks to Add to Your Portfolio on Promising Industry Trends

The Zacks Gaming industry is benefiting from an increase in Macau gaming revenues, strong demand for sports betting and robust U.S. commercial gaming revenues. Stocks like Boyd Gaming Corporation (BYD), Red Rock Resorts, Inc. (RRR) and Melco Resorts & Entertainment Limited (MLCO) are likely to gain traction from upbeat demand.

Industry Description

The Zacks Gaming industry includes companies that own and operate integrated casinos, hotels and entertainment resorts. Some industry players also deliver technology products and services across the lotteries, electronic gaming machines, sports betting and interactive gaming markets. Some firms develop and operate gaming establishments and associated lodging, restaurants, horse racing and entertainment amenities. Many companies are involved in developing and selling gaming applications. E-sports or sporting events or tournament services, content management systems, video software, mobile applications and e-sports data platform solutions are provided as well.

Key Themes Shaping the Gaming Industry

Macau Gaming Revenues Improve: Macau’s gross gaming revenues (GGR) climbed to MOP 22.15 billion ($2.76 billion) in August, per the Gaming Inspection and Coordination Bureau. The figure reflects a 12.2% increase from the prior year and a modest 0.1% gain over July. Casino operators are adopting a disciplined operational strategy by streamlining business processes, enhancing marketing approaches and renegotiating contracts with vendors and third parties. There is an intense emphasis on improving service quality and staffing levels to better cater to gamers.

U.S. Commercial Gaming Revenues Robust: In second-quarter 2025, U.S. commercial gaming revenues increased 9.8% year over year. Data from state regulators, compiled by the American Gaming Association, revealed that revenues from traditional casino games, sports betting and iGaming totaled $19.44 billion.

Sports Betting Acts as Major Driver: The legalization of sports betting in Delaware, Mississippi, New Jersey, New Mexico, West Virginia, Pennsylvania, Rhode Island, Montana, Indiana, Tennessee, Illinois and New Hampshire has been driving growth for a while. Bettors can place wagers via digital platforms in Connecticut, Kentucky, Michigan, Massachusetts, Maryland, Minnesota, Missouri, Kansas, Louisiana, Oklahoma, South Carolina, California, Oregon, Arizona, Montana, Colorado and others. Some popular gaming applications include DraftKings, Barstool, FanDuel, BetMGM, BetRivers, Fox Bet and BetMonarch.

Economic Uncertainty Impacts Gaming Industry: Ongoing economic uncertainty, rising inflation and heightened geopolitical tensions are concerning. Economic instability often leads to reduced consumer discretionary spending, directly impacting casino visits, online betting and overall gaming revenues. Persistent inflation erodes consumers’ disposable income, making them less likely to spend on non-essential activities, such as gambling. Meanwhile, geopolitical risks, including regional conflicts and regulatory disruptions, add another layer of unpredictability, especially for companies with international operations or exposure to volatile markets.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Gaming industry is grouped within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #96, which places it in the top 39% of more than 245 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential.

We will present a few gaming stocks that you can add to your investment portfolio, given their strong fundamentals. However, it is worth looking at the industry’s shareholder returns and current valuation first.

Industry Outperforms the S&P 500

The Zacks Gaming industry has outpaced the S&P 500 Index and the broader Zacks Consumer Discretionary sector in the past year.

The industry has risen 37.3% over this period compared with the S&P 500 Index’s growth of 19.9%. In the same time frame, the sector has gained 24.4%.

1-Year Price Performance

Gaming Industry's Valuation

Since gaming companies are debt-laden, valuing the same based on the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) ratio makes sense. The industry currently has a trailing 12-month EV/EBITDA ratio of 21.45. The space is trading at a premium compared with the market at large, as the trailing 12-month EV/EBITDA ratio for the S&P 500 is 18.35.

Over the past three years, the industry has traded as high as 28.95X and as low as 14.27X, with a median of 18.67X, as the chart below shows.

Enterprise Value-to-EBITDA Ratio (Past 3 Years)

3 Gaming Stocks to Watch

Boyd Gaming: The company is benefiting from its diversified business model, operational efficiencies and robust visitation from Hawaii. Also, strong engagement from core customers and stable trends among retail customers added to the positives. Going forward, Boyd Gaming intends to focus on property upgrades and strategic investments to propel long-term growth.

This Zacks Rank #1 (Strong Buy) player’s shares have gained 8% in the past three months. BYD’s 2025 earnings estimates have increased 4.9% to $6.89 in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price & Consensus: BYD

Red Rock Resorts: The company is benefiting from the strong Durango Casino Resort and Las Vegas operations and robust contributions from non-gaming segments. Durango Casino Resort delivered more than a 15% return net of cannibalization through the second quarter of 2025. The focus on development projects and portfolio reinvestments to capture incremental demand bodes well. RRR remains optimistic about long-term growth prospects, supported by favorable demographics in the Las Vegas Valley and a deep land bank for future expansion.

This Zacks Rank #1 player’s shares have gained 17.7% in the past three months. RRR’s 2025 earnings estimates have increased 12.7% to $1.77 in the past 60 days.

Price & Consensus: RRR

Melco Resorts & Entertainment: This company is benefiting from strong momentum across its Macau operations. City of Dreams Macau and Studio City delivered record performances in mass market table games in second-quarter 2025, underscoring the strength of Melco’s core business. At the same time, the company has been driving cost efficiencies, which have helped expand margins and improve profitability. These factors, combined with strategic initiatives aimed at long-term sustainability, have positioned Melco on a firm path for continued growth.

This Zacks Rank #1 company’s shares have soared 51.3% in the past three months. MLCO’s 2025 earnings estimates have surged 69% to 49 cents in the past 60 days.

Price & Consensus: MLCO

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This article originally published on Zacks Investment Research (zacks.com).

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