This week, Australian anti-gambling advocates unveiled a report that makes startling reading for anyone with a pension: the 20 largest superannuation funds in the country hold a combined US $10.3 billion in gambling stocks.
That is a lot of money by anyone’s reckoning. And per data from the advocates’ report, the largest fund holder of gambling stocks (Australian Super) is sitting on US $3.4 billion in gaming shares.
But while the Alliance for Gambling Reform’s report may be surprising for some, a deeper dive into the numbers in Australia and elsewhere shows this may be but a drop in the ocean.
Collectively, all 20 of the biggest Aussie superannuation funds own assets worth US $823.42 billion. Gambling stocks comprise just 1.2% of their holdings.
And while Australian Super’s US $3.4 billion gambling stock holdings are the largest on the list, its total asset holdings are worth $155 billion – meaning gambling stocks comprise just over 2% of its total share holdings.
Pension Funds’ Gambling Stock Penchant
While the alliance and other anti-gambling advocates argue that 2% is 2% too much, fund managers would likely point to the fact that the biggest Aussie gaming firm on the market is Aristocrat Leisure.
Aristocrat is the Australian Stock Exchange’s 16th largest firm, with a market cap of almost US $26 billion.
And it is far from the only show in town: The Lottery Corporation and Light & Wonder command a combined market cap of around US $15.5 billion, with Tabcorp worth an additional US $1.4 billion.
Combined, that’s US $43 billion, or almost 2% of the ASX’s total market cap.
“If you’re a fund manager trying to put a portfolio together without an ESG [Environmental, Social, and Governance] brief, it’s hard to turn your nose up at high-cap companies, even if they are gambling firms,” Giles, a London-based financial expert, told CasinoBeats on condition of partial anonymity.
“UK funds often include big tobacco firms in portfolios for much the same reason,” said Giles.
British Pensions: Gambling Stock-Keen
Indeed, in the UK, the numbers show that financial firms appear to have gone heavily into gambling stocks a long time ago.
BlackRock, which claims to provide pensions for 13 million Brits, owns a stake of over 4% in the London Stock Exchange-listed Entain.
Other significant Entain shareholders include Vanguard’s capital management arm. Vanguard provides pension plans to around 700,000 British residents.
BlackRock and the Vanguard Group both own between 3.8% and 5.41% apiece of Flutter Entertainment’s total float.
And the list goes on. Entain’s other major shareholders include Barclays, one of the UK’s biggest banks (and another big pensions provider). JPMorgan Chase and the French megabank Société Générale also hold significant stakes.
In fact, take a look at the ownership list of any major listed gambling firm anywhere in the world, and there is a high likelihood you’ll find Vanguard, BlackRock, and the like in there somewhere.
And it is not just private-sector pension providers. States are in on the action, too.
South Korean ‘Sin Stock’ Controversy
South Korea’s state pension fund is the world’s third-largest, by many estimates. It has a value of around $920 billion. But the government has faced an almost endless barrage of controversy over the fund’s so-called “sin stocks” holdings.
Lawmakers in 2022 revealed that the South Korean National Pension Service was holding $3.71 billion worth of domestic and international alcohol, gambling, and tobacco-related stocks.
Despite protestations, the NPS continues to own over 5.4% of the shares in Kangwon Land, the operator of the only casino in the country that admits domestic passport-holders.
The NPS also owns over 10% of the shares in the foreign-passport-holder-only casino operator Lotte Tour Development. And it is one of the biggest shareholders in other casino operators, such as Grand Korea Leisure and Paradise.
In Canada, meanwhile, the $564 billion, government-owned, federal Crown corporation Canada Pension Plan Investment Board owns around 31% of the sports tech and betting data provider Sportradar.
Big-name investors everywhere continue to be drawn in by the allure of gambling stocks. Pension funds, it seems, find them just as appealing.
Giles concluded: “If you have a pension plan and you or your employer doesn’t screen for ESG, then yes, chances are, it may well be exposed to gambling stocks.”
