Partly because of the well-documented adverse effects of compulsive gambling, a subset of ethics-based investors exclude gaming companies, along with other “sin stocks,” from their investment universe. Even for investors not using explicit social criteria, integrating ESG factors into the analysis of gaming companies is key in identifying those that are well-positioned to provide long-term returns to shareholders. More specifically, the implementation of responsible gaming principles is a critical aspect of the business model — not only in reducing risk, but in driving a more sustainable revenue stream.

Michael Shavel, CFA, is the Research & Business Analyst at Cornerstone Capital Inc. and a former Research Analyst on AllianceBernstein’s Global Growth & Thematic team.

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