Maybe the only place more excited about March Madness than the campuses of the schools that made the tournament is Las Vegas. Around $9 billion in legal and illegal bets were placed on the tournament last year, and Vegas casino operators Las Vegas Sands Corp. LVS, Wynn Resorts, Limited WYNN, MGM Resorts International MGM, Boyd Gaming Corporation BYD, Caesars Entertainment Corp CZR and others took home an estimated $100 million in profits stemming from the tournament.
Although Vegas casinos will take home plenty of profits from wagers themselves, the biggest profit boost will come from sky-high room occupancy rates, which could exceed 98 percent during the tournament. In fact, the opening weekend of March Madness draws so many sports fans and gamblers to Las Vegas that it ranks as one of the top five marketing events of the year for the city.
MGM has the most riding on a successful tournament this year because the company controls nearly half of the 62,000 hotel rooms on the Las Vegas strip.
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Gabelli & Co believes that investors who were buying U.S. casino stocks on the early 2016 pullback got some great deals. The firm noted that the U.S. casino business is tied closely to the health of the U.S. consumer. In addition, Gabelli & Co believes that there will continue to be plenty of M&A activity in the space.
The firm named Boyd, MGM, Las Vegas Sands, Churchill Downs, Inc. CHDN and Isle of Capri Casinos ISLE as top stock picks.
Disclosure: The author is long Wynn.
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