Hard as it may be to believe, Macao is on track to gross $77 million in 2017. That leaves Las Vegas hopelessly in the dust as a gambling destination, especially with non-gaming amenities taking up a bigger share of the tourist dollar. If you want to get a piece of the Macanese action, investment advisers offering varying counsel, though they seem to prefer a company that hedges its Asian risks with a U.S. presence (i.e., not Melco Crown Entertainment).
The Motley Fool‘s Jayson Derrick likes MGM Resorts International. He notes that it has consistently outperformed the S&P 500 whenever the U.S. economy has hit a trough. He characterizes Macao as a “a pure gambling destination that still has room to grow.” When the topic turns to Vegas, Derrick stresses convention business instead.
Seeking Alpha prefers companies whose money is where their mouth is. That means Wynn Resorts and Las Vegas Sands, whose CEOs are also their leading investors. They’re also lauded for stock buybacks and high dividend yields. Both companies also have enormous investment capital at hand. Let’s just say it’s a compelling case.
Cirque Lite. Incidentally, Palazzo is offering a gymnastic spectacle in the form of the Chinese ballet Panda! We saw it the other night and it’s fun, if incomprehensible . (Think Kung-fu Panda meets KA.) There seemed to be a lot of “plants” in the audience to cue applause and the theater was less than full. Although very likeable, Panda! is an odd critter: Asiatic tourists come to Vegas for experiences they can’t get close to home. And if it were presented in Macao, Panda! would expire for lack of attendance. (It’s a territory that defeated Cirque du Soleil, remember.) I hope it succeeds on the Strip but wonder if it can keep pace with the competition.
Oxford Casino in Maine has been paying off like gangbusters for Churchill Downs, for whom it is doing 15% ROI. (Rare these days.) However, it could encounter a vast dilution of the market. The Maine Gaming Commission recommended a wide variety of new gambling options before adjourning amid an autumn squabble. Since gambling expansion in Maine is decided by local vote, not statehouse statute, the commission would appear to have been within its remit.
“Does it make any sense for Maine to have a casino every 100 miles or so? I don’t think it does,” said state Sen. John Patrick (D). But that’s a question the free market was made to answer. And it will. A study by the Center for Policy Analysis at the University of Massachusetts Dartmouth showed that Oxford Casino was eating into Hollywood Casino Bangor‘s revenues and the latter wasn’t recapturing the business. Some 96% of a proposed Biddleford Downs Casino‘s revenue “will be pure displacement and cannibalization of existing casino gaming revenues.” That’s without competition from Massachusetts and/or New Hampshire. That free market is a bitch.
