Editor's note: Opportunities to book a 63-bagger don't come around often.
But that's exactly what our friend Matt McCall thinks could be happening, thanks to a recent Supreme Court decision to overturn a federal law prohibiting sports betting.
In today's essay, Matt explains why the best way to play this coming boom is by owning a unique kind of business with an incredible track record...
You Can Make a Fortune From a New Kind of 'Croupier' Business
The best entrepreneurs and investors know that when the government legalizes an activity that has been banned for years, it creates massive opportunities.
The lifting of Prohibition in 1933 allowed alcohol companies to mint money in the years that followed. The lifting of America's gold ownership ban in 1974 allowed gold investors to make more than 10 times their money in the years that followed. And I'm sure you know how many marijuana stocks have recently soared as much as 20-fold thanks to new legalization laws.
Here's another big reason I'm so bullish on sports betting, especially the betting platforms...
They employ a unique, extremely powerful business model that is often called the "croupier" model.
The croupier business model doesn't get much mainstream press, but it's one of the best business models on the planet. And it has a way of making its shareholders rich. Longtime Stansberry Research readers may recall Dan Ferris detailing the power of this business model years ago.
Croupier is a French word (pronounced "croo-pee-ay") meaning someone at a gambling table who runs the game and helps gamblers place their bets. He also takes a small cut of the total bets placed.
A good croupier business is a wonderful, wonderful thing.
The croupier isn't one of the gamblers taking huge risks. He doesn't bet at all. He just makes a little bit of money from every bet. He is the guy skimming small amounts from huge volumes.
Eventually, all the small amounts add up to a big pile of money.
Croupier businesses can include stock exchanges, credit-card companies, commodity exchanges, brokerages, and, of course, casinos. They are toll roads on the world's financial highways.
Trillions of dollars travel around the world every day. That travel is not free. The croupiers always get their cut.
Since croupiers don't have to spend a fortune on factories, heavy equipment, or raw materials, they typically generate high profit margins. That's a good thing for investors. It allows them to become what Porter Stansberry calls "capital efficient."
But it gets better... Croupiers are also often insulated from competitive threats because of regulatory barriers to entry or because they moved into their market first, became established and trusted, and made it difficult to compete with them.
Croupier businesses often have "wide moats" around them. A wide moat – or a set of circumstances that makes it hard to for other businesses to compete – is a quality that legendary investor Warren Buffett treasures.
For example, the Chicago Mercantile Exchange – owned by CME Group (CME) – is one of the world's largest and most important financial exchanges. It's where investors, speculators, and businesses go to transact in financial instruments like currencies and commodities.
Businesses use CME's exchanges to hedge currency exposure. Large commodity producers use CME's exchanges to lock in the prices at which they will sell their future production. Speculators use CME's exchanges to bet on stocks, bonds, and commodities.
CME doesn't risk money on the direction of any of these things. It doesn't care if the price of oil goes up or down. It's just the middleman, taking a small cut from each transaction. CME's dominant position in the marketplace makes it difficult to compete with.
This business model has made CME a fantastic investment. From 2004 to mid-2018, CME shares returned 1,675% (including dividends), an incredible return compared with the broad market's return of less than 200% (including dividends) during the same time...
CME isn't an isolated case of a croupier proving to be an incredible investment.
Below is a chart showing the returns generated by another croupier, a large financial exchange called Intercontinental Exchange (ICE), compared with the broad market from late 2005 to mid-2018. ICE returned nearly 1,500% against the broad market's 150%.
And the chart below displays the return generated by the powerful London Stock Exchange Group (LSE.L) compared with the return generated by the broad market from 2004 to mid-2018.
LSE returned about 2,000% compared with the broad market's 150% return.
Collecting small fees on millions and millions of transactions... acting as the toll taker on the world's financial highways... That's the croupier business. That's the kind of business we want to own.
Investment Opportunities
Speaking of the kinds of businesses we want to own, let's talk more about specific opportunities in sports betting.
The sports gambling trend is clearly in motion, and everything points to a strong boom in sports gambling following the Supreme Court's monumental decision.
A number of players in the industry can succeed and take a big piece of the growing sports gambling pie. The most obvious would be the casinos that can easily add a sportsbook and attract gamblers who are already on their properties. They also have another advantage, because in most states you must have a physical property, such as a casino or a racetrack, to obtain a sports gambling license.
Plus, technology is needed to power the gambling experience on land and on mobile devices. In the coming years, the majority of wagers will be placed via apps, and we want to own companies that are at the forefront of this technology.
Then there are the bookmakers that have been around for years overseas, predominantly in the U.K. British/Irish partnership Paddy Power Betfair is already making a big move into the United States.
And finally, there are the leagues and the teams themselves. Only a few U.S. sports teams are publicly traded, and my favorite has the makings of a big winner thanks to the Supreme Court's decision.
How to Get Rich Without Trying or Thinking Hard
When an industry enjoys years and years of robust growth, it's often said to have a "tailwind."
When an industry has a strong tailwind behind it – like Internet stocks in the 1990s – practically anyone can make lots of money in it.
Achieving success in these situations can be like hopping on a boat that is headed downriver... You can practically float your way to success.
You can make good money in a slow-growing industry, but making big money is a heck of a lot easier and your chances of doing so are a heck of a lot higher if you focus on industries with powerful, long-term tailwinds at their backs. When you do this, you can get rich without trying or thinking hard.
This is just the situation we have in the sports betting industry. A powerful long-term tailwind is about to start blowing at its back. Invest accordingly.
Regards,
Matt McCall
Editor's note: Matt believes the tailwind in sports betting will last long enough and become so powerful that early investors who put their money in the right stocks stand to make five to 10 times their money. He has put together a full presentation detailing the opportunity and how you can take advantage of it. Watch it here.