Much like his presidency, Donald Trump’s famed casino empire went out with a bang…
One created by 3,000 pounds' worth of dynamite.
On February 17, 2021, the Trump Plaza was blown to smithereens in a controlled demolition. The local government even offered up a raffle to be the one to push the button. While it took only a few seconds to destroy the building, the writing had been on the walls for years.
At one point, the Trump Plaza was the single-biggest casino in Atlantic City. It arguably put the city on the map as a worldwide tourist destination for those interested in slinging cards, tossing dice, and yanking slot machines. And there were many, many people interested.
For a time, the Trump Plaza was the single-most profitable casino in Atlantic City. Celebrities from all over the world would travel there to eat, drink, and gamble. It wasn’t a surprise to see Madonna, Mick Jagger, or Jack Nicholson sitting ringside for one of the casino's famous Mike Tyson fights.
You could say that Trump made gambling and boxing — and gambling on boxing — great again!
Fast-forward to today, and that luxurious palace has fallen into complete disrepair, along with the entire casino industry. Suffice it to say, there were no monopolies in the casino business at the time, and the Trump Plaza was hemorrhaging money for many years before declaring bankruptcy and finally falling to its knees.
But while Trump and his casino have been immolated in recent weeks, gambling itself is experiencing a resurgence…
In 1976, the resort city was plagued by crime and had serious trouble attracting tourists. Hotels were closing left and right. That’s when New Jersey legalized gambling. This reminds me a heck of a lot of the cannabis industry, which I’ve detailed many, many times before.
The very real need for tax revenue to cover budget shortfalls has forced many on-the-fence states to legalize gambling.
We've already seen states like Virginia and Tennessee legalize gambling this year.
Sports betting is now legal in 21 U.S. states, including New Jersey, obviously, and Pennsylvania. People travel to other states to gamble, which has led my own state of Maryland to legalize gambling to avoid people going out of state to spend their money.
I personally have been to the Horseshoe Casino in downtown Baltimore — for a Norm Macdonald comedy show, I should add — and witnessed a lot of money being parted from customers who would have otherwise gone to Delaware.
But there are four major states that have still not legalized gambling: California, New York, Texas, and Florida.
My bet is that at least two of those will fall, opening up billions in additional revenue and jobs.
To return to the Trump Plaza, my favorite Mike Tyson quote is "Everybody has a plan until they get punched in the mouth."
And casinos have indeed been punched in the mouth. The coronavirus lockdown has cost casinos millions of dollars. Casinos have been losing money on bets, rooms, and food and beverages. Even Vegas turned into a ghost town.
But that should all change this year, and here are two ways to play it...
The first one is an ETF with the perfect ticker: BETZ, Roundhill Sports Betting & iGaming.
It tackles the online stuff pretty well, as its major holdings are Penn National Gaming Inc. (NASDAQ: PENN), Flutter Entertainment PLC (LSE: FLTR), and the big one this year, DraftKings Inc. (NASDAQ: DKNG).
It even focuses on SPACs betting on sport-betting technology and data providers. It has an expense ratio of 0.75% and 40 holdings.
Here's how it's performed since its launch one year ago...
Online gaming is the future, but there is plenty of cash to be made from the past...
Enter VanEck Vectors Gaming ETF (NASDAQ: BJK).
If you've been to Vegas — which I've done too many times for my own good — you've likely seen people dumping money into all kinds of casinos and hotels. While the travel restrictions have curbed visits to "Sin City," that will pass, and these casinos will go back to making money hand over fist.
BJK has holdings in the real world, like Wynn Resorts (NASDAQ: WYNN) and Las Vegas Sands (NYSE: LVS), which are beaten down for obvious reasons. People will start flooding these casinos as soon as they can. It should do quite well this year and beyond. Blood in the streets, as they say.
Though I have my issues with Vegas — and gambling — I like money where I can get it. Considering that Wall Street is the house and you are the mark, I would suggest betting on the house.
Despite the casinos imploding, there is a phoenix rising from the ashes.
Vice stocks are going to do well, that's all I'm saying...
P.S. If you're interested in checking out some more gambling stocks that could provide a little higher of a risk but much higher chance of reward, check out my latest presentation right here.
@mengeled on Twitter
Jimmy is a managing editor for Outsider Club and the investment director of several personal finance advisories, The Crow's Nest, and The Adventure Capitalist For more on Jimmy, check out his editor's page.
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