Shares of MGM Resorts (MGM 0.09%) continue to perform well on the stock market since the depths of the pandemic, climbing 125% over the past year and 231% over the last 18 months. But the stock may have more room to run as operations continue to improve. 

Las Vegas has been on fire since the summer started, and online gambling is just starting to show its true potential. The one blemish is Macao, but that's not enough to overlook all of the positive trends behind MGM Resorts stock. 

View of the Las Vegas Strip.

Image source: Getty Images.

Las Vegas is on fire

You wouldn't know there is still a pandemic in the U.S. based on the gambling numbers in Las Vegas. In August, gambling win on the Las Vegas Strip was $625.7 million, and over the past three months, win was $2.02 billion, for an $8.08 billion annualized pace. For perspective on just how big those numbers are, the best year on record for the Las Vegas Strip was 2007 with $6.8 billion in gambling revenue. 

These gambling numbers are even before we see a real recovery in mid-week and convention revenue. In 2022 and beyond, when the convention business returns, we should see strong revenue, not only on the gambling floor but also from rooms, food and beverage, and other revenue sources. 

When looking at MGM Resorts stock, the Las Vegas Strip is the cash machine. It'll keep spitting out money and will allow the company to invest in growth opportunities, like online gambling. 

Online gambling is taking off

MGM Resorts owns 50% of the BetMGM online gambling venture with Entain in the U.S., and that business is performing about as well as anyone could have hoped. In an update for investors, Entain said that BetMGM had a 23% market share in the U.S. for the three months ending in August and 26% share in the states where it operates. Better yet, it is battling for the No. 1 market position, which is a three-way battle with DraftKings (DKNG 4.28%) and Flutter, which owns FanDuel.

We will learn more about BetMGM's revenue and profits when MGM reports earnings, but for perspective on how the market sees online gambling, DraftKings has a market cap of $20.0 billion today, just shy of MGM's total market cap of $23.2 billion. If BetMGM has a larger share of the U.S. market than DraftKings, it bodes well for the value of MGM's 50% share of the venture. 

Macau is the only loss for MGM Resorts

The one weak spot in MGM's operation is Macao, where the company has two resorts. Gambling revenue in the region is only about a quarter of pre-pandemic levels, and that may continue as China takes a very cautious approach to opening up its economy after the pandemic.

It's not clear when cash flow will recover in Macao and what the future of the region is, given the uncertainty around regulation and gambling licenses beyond summer 2022. The good news for investors is that even without a recovery in Macao, the company is in good shape for future growth. 

MGM Resorts has a bright future

I think we're just starting to see the recovery in Las Vegas revenue overall (including non-gambling revenue) and online gambling is just starting to have an effect on operations. As these two segments grow, the business should grow, and MGM Resorts could be a great growth stock in entertainment and gambling.