I’m going to let you into a little secret. There is a way to gamble, by not gambling, whilst making money, but still getting the thrill of potentially losing money. But significantly reducing the risk of doing so.
How to Make Money from the Gambling Industry
It’s not exactly ESG investing. But, if you’d bought shares in gambling companies rather than chips, slips or spin you could have been rolling in winnings.
I love a bit of horseracing, I’m partial to sports spread betting on it, because it’s more like trading the financial markets than outright betting. I love the thrill of the race, like most do. The result is almost secondary. When I win I usually regret not betting bigger and when I lose, I regret betting at all. The only fun part is the nearly winning.
But the house always wins. Sir James Goldsmith, once said to the legendary fund manager Jim Slater (an old client of mine and author of one of the greatest books on value investing The Zulu Principle):
If you want to gamble, own the casino.
You may not be able to afford an actual casino, but you certainly can invest in the companies that do.
To give you an example, let’s look at some of the biggest gambling stocks in the UK:
Biggest publicly listed gambling stocks in the UK
If you are going to invest in gambling stocks, here are some of the gambling company stocks that you could invest in;
- William Hill (WMH.L)
- GVC (GVC.L)
- Flutter (FLTR.L)
- 888 (888.L)
- Rank (RNK.L)
- Playtech (PTEC.L)
If, instead of gambling over the last five years you’d invested £20 a week in these publicly listed gambling companies you would have made a profit of £4,088 and have an overall investment portfolio of £30,288.
Think about that for a moment. Including commission paid to your stockbroker and excluding dividends (your split of the profits from the companies you own) you would have invested (instead of gambled £26,200 and built that up to £30,288 by investing £120 a week.
We’ve based that on paying £3 per trade with stockbroker IG. We calculated the profit and loss based on buying £20 of each of the above stocks at the weekly opening price each week over the last five years. You can see the spreadsheet of calculations here.
Why invest in six different gambling companies?
One of the key rules of investing is to never put your eggs in one basket. Or to use the lingo, “have a diversified portfolio”. This simply means that it is less risky to own shares in lots of companies rather than a single one.
You can still lose money investing
It’s also important to note that you can still lose money investing. Some of the greatest investors in the world lose money at some point. But, the key to successful investing is being in it for the long haul. No-one makes money overnight. There are no get rich quick shortcuts. If you want to make money investing, buy shares and do nothing.
One thing to note though is that (and you will see this on all investment based websites): Past performance is not an indication of future performance.
This means that just because shares have gone up in the past, it doesn’t mean they will continue to go up in the future.
How to start investing in the gambling stocks
To stop gambling and starting investing the first thing you need is an investment account. There are many different types to choose from which you can read about in our investing section here. However, to buy individual shares you need a stockbroker.
The one we have used for this example is IG, one of the largest stockbrokers in the UK who charge £3 per trade for regular investing. There are loads of stockbrokers to choose from so take a look at our comparison tables to see which stockbroker suits you, sir.
Once you’ve taken your first step into a larger world. You’re no longer a gambler, you’re an investor.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.