This Stock Has Shed Over 40% From Its All-Time High in 2018: Time to Buy?

Early results on sports betting should inspire confidence in Stars Group (TSX:TSGI)(NASDAQ:TSG) for the long term.

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Stars Group (TSX:TSGI)(NASDAQ:TSG) stock has plunged 42% since hitting an all-time high of $51.75 back in June of this year. Shares are still up 1.1% in 2018 so far. Back in early September I’d targeted Stars Group as a potential buy-low opportunity.

Stars Group is expected to release its third-quarter results in early November. In September the company launched BetStars, an online sports betting brand in the regulated New Jersey market. The New Jersey Division of Gaming Enforcement revealed that New Jersey sportsbooks took in more than $95 million in bets in August.

An increasing percentage of wagers moved to online and mobile sports betting platforms. These developments should provide a boost for Stars Group as it attempts to establish a strong footprint in the state.

The debate over legal sports betting has raged on even after the landmark Supreme Court decision to strike down a federal ban in May. Last month I’d discussed a scheduled House Judiciary subcommittee hearing titled “Post-PASPA: An Examination of Sports Betting in America.”

The hearing was scheduled for September 27, the same day Christine Blasey Ford and Brett Kavanaugh gave their testimony before the Senate Judiciary Committee. Suffice is to say, the hearing on sports betting received the short end of media coverage through the week.

The hearing included testimony from Sara Slane, senior vice president of public affairs for the American Gaming Association; Jocelyn Moore, executive vice president of communications and public affairs for the National Football League; Les Bernal the national director of Stop Predatory Gambling, and several others.

The hearing lasted about 90 minutes and the debate centered around whether gambling regulations belong with the individual states or the federal government.

In some respects, the hearing mirrored the debate over legal recreational cannabis in Canada. Some lawmakers and witnesses painted gambling as a degenerate practice and urged stiff protections. NFL representative Jocelyn Moore encouraged the committee to create a “modern framework,” hinting at federal action. The fanfare of the occasion failed to bring any clarity for those wanting to know how Congress could proceed.

There is unlikely to be any action ahead of the November midterm elections. Going by the current polling data, the House has a good chance to flip to the Democrats, which means that states will likely be left to their own devices in determining a regulatory framework in the near term.

Those who are tempted to jump in on Stars Group stock at this stage should be pleased by this development. A federal framework could prove constricting, and early results in New Jersey have sportsbooks drooling, especially those with online and mobile platforms.

Watch for Stars Group to make inroads in other states that are moving forward on a betting framework in the coming weeks and months.

Beyond this, Stars Group has posted top notch earnings in 2018 so far. The stock is an attractive buy at its current price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

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