Credit Suisse analyst Ben Combes turned his attention to three major Las Vegas companies, starting with MGM Resorts International. He’s staying neutral on the giant, writing, “We 
see Las Vegas as a cyclical but long-term growth market, given strong leverage to US and global travel. We see defensive, domestic growth in Regional markets, with some supply growth. We are positive on the long-term outlook for Macau but think the next few months could be volatile, given macro, geopolitical, and licensing risks.”
On the upside, Las Vegas is seen as “a bright spot in gaming” and proprietary survey data is overwhelmingly positive: 10% room-rate growth in 3Q19 and 8% in 4Q19; convention attendance up 22% the rest of the year and airline capacity could be up as much as 6%.
Over in Macao, “China macro risks are well flagged, and China is easing monetary conditions and stimulating.” Credit indicators show the market continuing to decelerate through the rest of the year, then gaining steam in 2020. However, “Hong Kong protests, along with strained US-China relations, drive additional uncertainty … Macau gaming is historically volatile and is very sensitive to the Chinese economy and macro and micro policy decisions.”
Combes didn’t have anything to say about Wynn Resorts that couldn’t be found in his MGM note. His report on Las Vegas Sands was more specific, noting that the stock has sold down in 
recent months. (Some Wall Street boffins think it belongs up around $90/share.) “We’re positive on the long-term outlook, given leverage to growth in Chinese wealth, outbound travel, and consumption,” Combes wrote. He predicted Macao cash flow of $768 million in 3Q19, up 2.5% on stronger mass-market play, Sands’ meat and drink. It better be, as Combes added, “LVS’s Macau licenses expire in 2022, and renewal is likely sensitive to China-Macau policy and relations, and competitive lobbying. Regional competition for VIPs is increasing, and new development opportunities are not assured.”
Meanwhile, the Macanese government released a mid-term review on one of those five-year plans of which the ChiComms are so enamored. It rates casino-industry development as 
“healthy” in line with a set of “aspirations,” some of which had already been achieved. Some of the benchmarks are achievable, such as providing better-quality jobs to locals. Ditto increasing locally sourced purchases. Others suggest pure wish fulfillment on the part of City Hall, particularly with respect to directing casinos to derive a greater amount of their revenue from non-gaming activities—9% by next year: the command economy at its most baneful.
* By contrast, the free market is running riot in Cook County. As many as six municipalities can apply for casinos, although only
one will be chosen. So far it’s shaping up as a tribe-vs.-tribe scrum. Homewood has approved the Poarch Band of Creek Indians for a 64,000-square-foot casino, to be followed (four years later) by a 251-room hotel. The matter now goes to neighboring East Hazel for approval. The tribe’s big investment in Wind Creek Bethlehem (shown) ought to give its proposal heft and credibility. Its excellent record of charitable works also ought to work in its favor.
We’ll see your casino and raise you a $380 million one with a 20-story hotel, says the Ho-Chunk Tribe of Wisconsin. Of course, hailing from the Badger State, the project may not be welcome with the Illinois Gaming Board, which could see it as a stalking horse for casinos north of the border, where it already operates six—count ’em—casinos. Ho-Chunk has settled on the town of Lynwood, which was selected because the tribe already owns the Southland Sports Complex there and would juxtapose the casino with it. The Ho-Chunk already have one key supporter in Mayor Eugene Williams (D), who says, “We’re almost as far south and east as you can go and still be in Cook County. It’s a perfect position to get those dollars that have been driving to Indiana.” May the best tribe win.
