Don't look now, but the Las Vegas Strip may be the hottest spot in gambling. It's not the biggest -- a title that belongs to Macao -- but the Las Vegas Strip is growing faster than Macao or the very profitable Singapore casino market at the moment.
The trend may be just what Las Vegas-centric companies like MGM Resorts (MGM 1.65%) and Caesars Entertainment (CZR) need to outperform rivals on the stock market. The macro trend toward Las Vegas is worth keeping an eye on.
Las Vegas' hot streak
In the last 12 months, Las Vegas Strip gambling revenue has risen 1.4% to $6.59 billion, which may seem like a small increase, but growth seems to be accelerating. In the three months ending August 31, revenue was up 9.4%.
The biggest change over the year has been the return of baccarat, a game that's traditionally very strong in Asia. Baccarat win is up 24.3% in the last three months to $327.9 million. Craps is the only other notable game that's hot in the casino, with casino win up 21.6% to $81.8 million.
Sometimes single games rise and fall in Las Vegas, so if baccarat or craps were the only games for which play increased, investors could overlook it as noise in the numbers. But slot win is also up 4.5% over the past 12 months and 6.1% in the past three months. There are hot spots, of course, but Las Vegas is doing well while Asian markets are struggling.
Macao is the largest gambling market in the world, and it's struggled in 2019. Gambling revenue is down 1.9% so far this year and fell 8.6% in August, so it's trending in the opposite direction to the Las Vegas Strip.
In Singapore, Las Vegas Sands' (LVS -0.68%) casino revenue was down 11.7% to $1.01 billion in the first half of 2019. The mass market appears to be the weakest, and that's not great news for Asia's gambling market overall.
There are a number of macro reasons for it, from a slowdown in China to tariffs on exports to the U.S., but no matter what the causes, there's clearly a slowdown in Asia's gambling market.
The winners in Las Vegas
The companies with the largest market share on the Las Vegas Strip are MGM Resorts and Caesars Entertainment. They'll take the lion's share of the growth, which, in Caesars' case, could make acquisition by Eldorado Resorts (ERI) more palatable.
With the Caesars buyout looming, I think MGM Resorts is the company investors should watch as the outperformer in 2019. The company can gain market share globally with its Las Vegas base, and it still has the exposure to Macau that gives upside if Asia's gambling market turns around. If it's lucky, it could even translate its newfound strength into a gambling concession in Japan, the next hot spot in gambling.