The Best Way to Profit from New Jersey Sports Gambling

Here at Money Morning, we are always digging to uncover a new way for you to make life-changing profits.

We've been at the forefront of the legal marijuana movement that is turning tiny pot stocks into triple-digit winners.

We were ahead of the curve on cryptocurrencies, talking about Bitcoin since 2011. If you owned the crypto coin when it was trading for $1 in February 2011, you would now be sitting on a 586,579% gain.

atlantic cityAnd this week, I've uncovered another way to get ahead of the news and profit from an emerging trend.

This $150 billion black market is quickly becoming legal, and I know exactly where to look...

Time to Cash In on the $2.7 Billion New Jersey Casino Market

Last month, the Supreme Court removed a federal law that prevented states from legalizing sports gambling inside their borders.

For decades, Nevada had been the only place to legally slap $100 down on a Super Bowl bet.

You could, of course, go to an illegal bookmaker.

But that assumes you're able to pay your debts if you lose (and you value your kneecaps).

That's not the case any longer...

The Supreme Court decision immediately set off a wave of votes to legalize gambling in states across the country.

And investors are leaping at the chance to make a fortune as new money pours into sports gambling companies.

Naturally, the herd of investors piled into expensive stocks like MGM Resorts International (NYSE: MGM) and Las Vegas Sands Corp. (NYSE: LVS).

But there are better bets out there...

In Delaware, which just legalized sports gambling, I explained that Dover Downs Gaming & Entertainment Inc. (NYSE: DDE) is extremely undervalued, trading at a paltry 0.5 price-to-book value.

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In Pennsylvania, I recommended a fund that invests in high-rated debt and pays a strong dividend to investors.

But today, I want to talk about an investing strategy that capitalizes on the growth of sports gambling in New Jersey.

You see, Atlantic City is poised to rebound thanks to the Supreme Court decision.

Already, two new casinos have opened their doors on June 28.

The Ocean Resort Casino and the Hard Rock Casino are ready for a revival in America's adult playground.

And that is presenting a great buying opportunity for an asset that few people even know exists on the public markets.

Here's the secret play to make in the $2.7 billion New Jersey gambling market to lock in potential long-term gains...

The Real Profit Play in New Jersey Gambling

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I'm a big fan of closed-end funds.

As I've said in the past, they provide a combination of value, income, and appreciation upside that is commonly ignored by the markets.

I'm also extremely interested in cashing in on the financial lifeline that sports gambling will offer to states across the country.

More tax revenue thanks to the legalization of marijuana (and now sports gambling) will provide greater security to bondholders.

That brings me to MuniHoldings New Jersey Quality Fund Inc. (NYSE: MUJ), a closed-end fund operated by BlackRock Inc. (NYSE: BLK).

Let's start with the basics...

It has a dividend yield of 5.41%, and all of that income is completely exempt from federal income tax and New Jersey personal income taxes.

That's nothing to sniff at either. Even when you leave your money in a savings account, you still pay taxes on your interest.

Second, the fund has a small stake in bonds offered by the Casino Reinvestment Development Authority (CRDA), which has been responsible for about $1.8 billion in 400 projects across New Jersey since 1984.

The last few decades have been difficult for the casino industry, but the CRDA has injected about $750 million into Atlantic City since 2011. And that revitalization will be strengthened by the sports gambling initiative.

Legalized gambling means MUJ's bonds are even more likely to be repaid, and it will be incentivized to issue even more as casinos in Atlantic City reignite. That could push up the share price, dividend, or both.

Finally, this is a fund that invests only in AAA, AA, and BBB rated bonds and trades at a discount of 13.21% to its net-asset value.

That means you're buying every dollar of value for just $0.87.

And that value might not last for long...

Activist investors often take over undervalued closed-end funds and push them to their full value.

Also, Wall Street could start noticing how undervalued MUJ is, and new demand from investors could send prices higher.

That means now is the best time to invest in MUJ, before prices start to climb.

That 13% discount could close and give you a nice bump on your initial investment on top of the 5.4% you earn from the dividend payout.

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About the Author

Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

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