The Real Key to Growth in Macau

The single biggest limiting factor to growth for casinos in Macau isn't hotel rooms or entertainment attractions. It's table games. Table games generate such a disproportionate percentage of a resort's revenue that all of the bells and whistles around the games are really just a way to get gamblers to sit down and play.

That's why the government's allocation of tables is so important, as is the impact that new resorts will have on future revenue and profits. So, it's important to understand who is getting the most out of its existing tables and who is getting more in the future.

The gaming area in Macau is teeming with gamblers and is the hub of profits for casinos. Source: Las Vegas Sands.

Table games matter
Macau is a constrained gaming environment so, in general, the company with the most table games will generate the most revenue. Having those games as Macau's growth has exploded is key to increased profitability.

Between 2008 and 2013, Macau's gaming revenue was up 230% to $45.2 billion, but the number of table games only increased 43% from 4,017 to 5,750. Las Vegas Sands (NYSE: LVS  ) has the most tables of any U.S. traded company, followed by Melco Crown (NASDAQ: MPEL  ) and Wynn Resorts (NASDAQ: WYNN  ) . MGM Resorts (NYSE: MGM  ) doesn't break out the same detail as the others but we can use them as a proxy.

Below, you can see the number of tables and win per day from each of the U.S.-traded companies in Macau. These figures are before discounts and commissions, which are paid to players and junkets.  

 

Number of Tables in Q4

Table Games Win Per Day

Las Vegas Sands 

1,530

$18,083

Wynn Resorts 

492

$28,663

Melco Crown 

622

$28,150

Source: Company earnings releases.

You can see that the numbers are enormous, as is the potential for any company able to add games to their lineup.

Sands Cotai Central in Macau, Las Vegas Sands' latest addition. Source: Las Vegas Sands.

The key to growth in Macau
The next phase of growth in Macau is taking place today with Las Vegas Sands building The Parisian, Wynn building Wynn Palace, Melco Crown building Studio City, and MGM building a new resort as well. Each has targeted 500 table games for the new resort and if they get them the growth could be enormous.

Wynn, Melco Crown, and MGM could easily double existing casino revenue with their new resorts, although Studio City still isn't slated for a casino. Las Vegas Sands will add about one-third to its table games and grow its mass-market presence on Cotai.

The upside for investors is enormous, particularly for companies who get the tables they're planning on early in the process. Keep an eye on table allocation over the next two years because that's what will really drive growth in Macau.

Three stocks poised to be multibaggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multibagger stocks like Netflix time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.


Read/Post Comments (5) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 03, 2014, at 2:44 PM, pondee619 wrote:

    Several questions, if you please:

    1. In the table above, is "Table Games Win Per Day" is this win per table per day or TOTAL win on table games per day?

    2. If the former, why is the take per table per day for LV Sands so much less than the other two?

    3. If the later, why is the TOTAL take from table games for LV Sands so much less than the other inspite of having so many more tables?

    4. In either event, is there a reason that LV Sands is doing so poorly as compared to the other two? Should LV Sands, therefore, be avoided?

  • Report this Comment On April 03, 2014, at 3:11 PM, cp757 wrote:

    1530 X $18,083 = $27,666,990 per day times 365 =

    $10,098,451,350 dollars for Las Vegas Sands because they built the Cotai Strip to cater to the Mass Market that is growing every quarter as they build out the Parisian. With the new bridge coming from Hong Kong and all the new high speed rail connections Las Vegas Sands is the best investment in the gambling sector. They have the highest Market Share in the Mass Market sector and that is the place you want to be.JMHO

  • Report this Comment On April 03, 2014, at 7:13 PM, Senescent wrote:

    LVS has a gross win in Macao that is higher than the gross for the entire state of Nevada from all forms of gambling. It is a money factory. The lower win per table is largely due to LVS having more mass market tables, I believe LVS has a cost structure that allows it to keep a higher fraction of the gross win than its competitors. Going forward, LVS has much more strategic flexibility as it can, if it wants, convert some of those mass market tables into high roller tables.

  • Report this Comment On April 03, 2014, at 7:23 PM, yourbestfriend wrote:

    Table virtualization is coming. The licenses limit the number of physical table games, but technology exists to allow people at electronic terminals to gamble on the games in progress elsewhere within the casino.

    LVS is weighted towards mass-market, but none of the players ignores it, and all compete in premium-mass and VIP as well. The key to being profitable in Macau is being in the game, period. I don't think it's possible to choose any one player as the best at this point.

    Surfing their new-project announcements and new-property openings, and reallocating your portfolio weightings in the industry according to that timing, might be the only deterministic way to differentiate.

  • Report this Comment On April 06, 2014, at 1:32 PM, cp757 wrote:

    Imperial Stadium

    by The Tiger on Sunday 1 May 2011 under Gaming > Slots and electronic gaming

    This article first appeared in the May/Jun 2011 issue of World Gaming magazine.

    Following the explosive increase in electronic gaming in Macau, the Venetian and now the Sands have continued setting industry benchmarks with each casino creating a super sized e-gaming haven called ‘Imperial Stadium’.

    In 2009, Sands Macau introduced the Sands e-Lounge, a new casino within a casino that catered for electronic table game enthusiasts. By incorporating customer comments into the design and co-locating popular electronic versions of sic bo, roulette and baccarat, Sands found a new group of loyal players. Its popularity saw Sands China Ltd embark on the 'Imperial Stadium' project, which offers a space that works for casino and player alike.

    The opening of the Imperial Stadium

    Both Imperial Stadiums offer comfortable surroundings for players to sit and enjoy roulette and sic bo. The Venetian version can accommodate up to 150 players with the Sands stadium seeing up to 100 players join the action. This style of gaming is perfect for lower limit players as it creates a fast paced atmosphere. From an operational perspective traditional roulette games can be very slow and roulette tables certainly take up a lot of space on a casino floor. It takes experienced dealers to run these games and there is only room for a few players at any one table. The Imperial Stadium model allows many more people at the table and it is easier to run. With these enhancements the popularity of roulette is sure to rise.

    www.worldgamingmag.com/en/gaming/slots-and-electronic-gaming...

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2902078, ~/Articles/ArticleHandler.aspx, 9/21/2014 8:11:39 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 17,279.74 13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASD 4,579.79 -13.64 -0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/19/2014 4:01 PM
LVS $62.33 Down -1.62 -2.53%
Las Vegas Sands Co… CAPS Rating: ***
MGM $23.12 Down -0.27 -1.15%
MGM Resorts Intern… CAPS Rating: ***
MPEL $27.06 Down -0.30 -1.10%
Melco Crown Entert… CAPS Rating: ****
WYNN $185.28 Down -2.55 -1.36%
Wynn Resorts, Limi… CAPS Rating: ***

Advertisement