Key insights
- The author suggests lottery stocks may be a good investment during economic downturns due to 'hope spending'. Demand for lottery tickets tends to be stable or increase during recessions. While lottery stocks may offer some downside protection, they are unlikely to drive significant positive returns for the broader US equity market.
I recently invested in lottery stocks, and here's why I believe it's a smart move if the economy keeps getting kicked.
This post is NOT a financial advice or reccomendation, but my point of view. I don't reccomend particular stocks.
Lottery businesses benefit from what's often called "hope spending." Especially during downturns and recession, people continue buying low-cost lottery tickets for a chance at a big, lifechanging win. This makes demand relatively stable, and sometimes even stronger when economic conditions worsen.
During the 2008 crisis, lottery revenues remained far more resilient than cyclical industries like retail or real estate. A similar pattern appeared in the COVID-19 recession (for an example - check $BRSL, which almost doubled in price during 2021 period)
DISCLAIMER: I own stocks mentioned in this post.