What happened
Shares of Scientific Games (LNW -0.99%), a provider of gambling products and services, jumped 24.7% in May, according to data provided by S&P Global Market Intelligence, as casinos across the U.S. started to open again. Shares have continued their run in June, too, rising 25.9% near the end of the trading day on Monday, June 8.
So what
Scientific Games reported earnings in May, showing a 13% decline in revenue in the first quarter of 2020 to $725 million and a net loss of $155 million. That didn't impress anyone but was understandable given the shutdown of casinos across the U.S. in March.
Image source: Getty Images.
What pushed shares higher was a more speculative move. Casino companies started to announce reopenings in mid-May, and now, in early June, a large portion of U.S. casinos are open to some extent. That businesses are back open should mean more revenue for Scientific Games in the long term, even if demand is suppressed this year.
Now what
There wasn't enough positive news for me to buy this volatile consumer discretionary stock, but there's certainly reason to be hopeful now that casinos are opening. What I would like to see in 2020 is growth in the online gambling business, because Scientific Games provides technology to online operators. That could be a business that takes off in the next few years, especially if states turn to gambling to fill holes in their budgets.
