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It's been a busy month in the gambling industry as Las Vegas opened a new casino, Macau shook up its future, and Singapore filled its coffers.
Asia grows, Vegas slows, what's new?
After a few strong months, Las Vegas Strip gambling revenue fell 4.1% to $454.3 million in November. In comparison, revenue grew 16% in October and a modest 2.8% in September, but investors shouldn't panic over the drop. Convention business was pushed from November to October, and if you smooth out the changes by averaging them, that is still 4.9% growth on average.
Macau gaming revenue grew 66.4% in December and ended 2010 with 58% growth for the year, another banner year. The end of 2010 was very similar to the end of 2009 with gaming revenue virtually flat for the final three months of the year. I'll be watching next month to see if revenues take another jump or if we're in for slower growth in 2011 (slower than 66% still isn't all bad).
The bounce in revenue should help Melco Crown (Nasdaq: MPEL ) catch up to the performance of competitors on the Cotai Strip. If we see improved EBITDA margins this quarter from Melco, the stock should continue its steady rise.
If you thought Las Vegas was struggling, Atlantic City conditions are even worse with gambling revenue down 9.6% in 2010, the fourth straight year of declines. MGM Resorts (NYSE: MGM ) is lucky to be getting out alive, but Boyd Gaming (NYSE: BYD ) still owns half of the Borgata and the weak results could weigh on shares for a while.
Las Vegas Sands in focus
It's been an interesting month for Las Vegas Sands (NYSE: LVS ) on the Cotai Strip. Macau rejected the company's bid for Sites 7 & 8, a big blow to the company's master plan in Cotai. You wouldn't know the loss hurts given CEO Sheldon Adelson's response. At a recent gaming conference he said, "I almost prefer it be developed by somebody else because I've already got land there." Adelson's nose grew six inches shortly after making the statement.
In positive news, Adelson did move closer to monetizing co-ops at the Four Seasons hotel, which would continue the strategy of selling off non-core assets.
Singapore gambling is off to a smashing start, as expected. From April to November of 2010, $324 million was contributed to the Singapore government from the two casinos there. Marina Bay Sands should give investors plenty to cheer about when fourth quarter earnings are released.
MGM asks for more cash
I'm dumbfounded at how sophisticated investors can keep giving cash to MGM Resorts, and yet the company has come with pockets turned out again. Now it wants to sell $1.1 billion in notes to refinance CityCenter. The rating agencies don't even know what to think with Moody's giving a stable outlook and S&P having a negative outlook.
All I need to see is an $8.5 billion price tag for the resort and $52.4 million in EBITDA during the first nine months of 2010 to give a negative outlook. With that said, if the deal goes through shareholders should cheer because maturity would be pushed back four years.
Another new casino
The Cosmopolitan, owned by Deutsche Bank (NYSE: DB ) , opened in December much to the dismay of competitors. The resort will not charge a resort fee and has free wifi throughout the property. I know where I'm staying on my next trip to Las Vegas.
Gambling news of the weird
Wynn Resorts (Nasdaq: WYNN ) CEO Steve Wynn is now a legal resident of Monaco and a director at Monaco QD International Hotels and Resorts Management. Wynn can now introduce himself as an American or Monegasque citizen, a nice option depending on whom you're talking to.
In our first, and hopefully last, Motley Fool crime update, the $1.5 million in casino chips stolen from MGM's Bellagio in December will soon become worthless. The casino is discontinuing the $25,000 chip stolen in the heist, and on April 22 their value will be reduced to whatever you can get on eBay.
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