Advertiser Disclosure

This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services. Nonetheless, our opinions are our own.

Summary hide

Introduction
Betting On The House?
Proven Returns?
Alternatives & Balancing The Books
Conclusion
- Recommended Reads

Introduction

Managing a pension fund is one of the riskiest jobs in finance. Multiple multi-trillion dollar pension funds contain the retirement balances of some of the world’s most elite industries and corporations. Myopic investment strategies and a constant, unquenchable thirst for gains plague the world of finance. However, pension funds are uniquely positioned as they must consider both the short and long term and genuinely consider it, with trillions of dollars at stake.

It’s this balance which is almost impossible to strike in finance; it’s why pension fund managers often have a team of analysts and experts around them, helping them come up with ideas and invest in sectors that could result in significant growth from all angles, whether it’s short, medium or long-term, but ideally all three.

Betting On The House?

In gambling, an age-old adage states that the house always wins. Unfortunately, this is the case for casino gamers. Pension funds had been listening to the quote and decided to back the house rather than gamble it away. Well, not all pension funds, but some of the most significant funds in Norway and Australia have invested billions of dollars into gambling stocks since the beginning of the 2010s.

In hindsight, it was a no-brainer. Gambling was becoming modern, smartphones dominated the sector, and industries were spreading across countries with the highest disposable income, including the US and Canada.

From a technological perspective, individual sectors of the casino gaming industry were peeling off and standing on their own two feet with great aplomb and vigour. Slot gaming, for instance, moved seamlessly from PC and laptop displays to smartphones and alternate payment methods.

A cash casino site utilises the mechanics and the underlying design of what made land-based slots such an attractive proposition. It fuses it with the underlying security, gaming software, and development of some of the most forward-thinking entertainment sectors in the world. It’s clear why pension funds were scrambling over each other to claim a piece of these companies for their investors.

Proven Returns?

They were investing in the asset as well as some of the biggest internet gambling companies, many of which are now household names throughout the UK, US, and Canada.

Some large-scale pension funds have wound down their investments in gambling stocks over the last half-dozen years. In fact, KLP, the biggest pension fund in Norway, has excluded all gambling, alcohol, and weapons manufacturer stocks—a move they made in 2019 but have not reversed.

The most prominent Australian pension fund hasn’t taken such a hardline approach. It’s one of the most revered pension funds on the planet, and it invests in gambling, Australian mining, and hundreds of billions of dollars worth of foreign stocks and bonds.

Gambling, though, is unique. It’s expanded massively into a new, open digital space. Rather crucially, Australian and Norwegian pension funds invested in gambling stocks before the recent golden period, and the surge in users and profits that took place throughout the 2010s has significantly benefitted the beneficiaries of these pensions.

While the leading Norwegian pension fund might now be on its high horse about not investing in certain types of stock, this was not a problem when it resulted in billions of dollars of profit annually, almost every year, throughout the late 2000s and early 2010s.

The holier-than-thou approach would have been more commendable if they had adopted it from the beginning rather than accumulating huge profits from the industry before sailing off into the sunset after over a decade of involvement.

Alternatives & Balancing The Books

Many of us will never have to deal with a multi-trillion-dollar portfolio in our lifetime. It involves many moving parts. In the case of Norway’s leading pension fund, the economic performance directly impacts the health of the European stock market and the broader Western economy.

There are hundreds of alternatives, though. In the US, there’s the 401k, which aims to provide a more flexible option compared to pension funds, which are often locked away for years until they mature. Likewise, more people have looked toward private equity and investing their own money into property portfolios and alternative investments such as cryptocurrency, both of which are riddled with volatility.

Conclusion

While no industry can guarantee returns, the rise of the internet has meant that more information and research are available for people to explore and take ownership of their pensions and funds accumulated throughout a lifetime of work.

Pension funds opt for gambling stocks because they are basically betting on the house, and the house, technically speaking, has the edge. Not all casinos are profitable, and not all gambling stocks relate directly to live wagers.

Many of these companies specialize in software design, marketing, and other aspects of the gambling world. While there’s been a significant rise throughout the 2010s, it’ll be interesting to see if the market plateaus. Often, pension funds and their confidence in a sector are the first signs that things might not be rosy, so if they start pulling their investments out, this could be a sign the industry has levelled out in the short term or might be set for a downturn.

The FangWallet Promise

FangWallet is an editorially independent resource - founded on breaking down challenging financial concepts for anyone to understand since 2014. While we adhere to editorial integrity, note that this post may contain references to products from our partners.

The FangWallet promise is always to have your best interest in mind and be transparent and honest about the financial picture.

Become an Insider

Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned. The opinions expressed here are the author's alone.

The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur including the potential loss of principal.

Advertiser Disclosure: This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services.

Write for Us