Even as some of the air comes out of gambling stocks, MGM Resorts (MGM -0.48%) is continuing an incredibly strong run, fueled by its recent third-quarter earnings report. Not only is MGM Resorts recovering in Las Vegas, but its online gambling business is also beating the competition in many ways. 

You can see below that MGM stock has outperformed its biggest rivals in 2021, and that is unlikely to stop if current trends continue. Let's take a look at the quarter and why MGM Resorts is well-positioned to be a great growth stock long-term. 

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Money is flowing from MGM's casinos

Revenue isn't back to where it was pre-pandemic, but MGM is making more money than it ever has at its casinos. According to this week's third-quarter 2021 earnings report, in the Las Vegas Strip net revenue was $1.38 billion, up from $1 billion a quarter ago but down from $1.51 billion two years ago. But it's adjusted EBITDA (which is a proxy for the cash flow coming from a resort and casino) that investors should focus on -- and the numbers are outstanding. 

Adjusted EBITDA on the Las Vegas Strip was up from $397 million in the second quarter of 2021 to $535 million in the third quarter of 2021. That's up 21% from the company's adjusted EBITDA in the third quarter of 2019. 

We see similar trends in regional operations. Q3 revenue of $925 million at regional casinos was down slightly from two years ago, but adjusted EBITDA of $348 million is up sharply from $269 million in Q3 2019. 

The general story here is that MGM cut costs when the pandemic hit, and costs are not rising at the same rate as revenue right now. Some of the costs cuts may even be permanent as the business becomes more efficient, so I think we may see record cash flow in the future as well. 

A craps table in a casino.

Image source: Getty Images.

Macao continues to struggle

The story in Macao is very different, and that's not unique to MGM Resorts -- it's true across all of Macao's casinos. Revenue in the third quarter of 2021 was $289 million, down from $738 million in the two-years-ago quarter. Adjusted EBITDA was just $7 million last quarter, compared to $184 million in the third quarter of 2019. 

It's likely Macao will continue to struggle over the next few years as China maintains travel restrictions and the gambling market takes the brunt of those restrictions. 

Why MGM is beating the iGaming competition

The other area of growth is online gambling, which includes online sports betting and iGaming, or games of chance played online. BetMGM, the company's U.S. 50/50 partnership with Entain, continues to perform extremely well. The company says BetMGM had $584 million in revenue in the first three quarters of the year, and it expects over $800 million in revenue in 2021. 

According to a management presentation, BetMGM had a 32% market share in iGaming in August 2021, double the second competitor, and a 23% market share of all U.S. online sports betting and iGaming. The business still isn't profitable, and management expects capital consumption will be $450 million this year, but the casino business is spitting off billions in cash and the money is being put to work in building out a potentially massive business in online gambling. 

MGM Resorts' bright future

The other two notable strategic moves MGM is undertaking are advancing a bid to build a $10 billion resort and casino in Osaka, Japan, and the potential sale of The Mirage in Las Vegas. The sale of The Mirage may come as a surprise, but after acquiring the Cosmopolitan between CityCenter and Bellagio, the company's center of gravity is clearly on the south end of the Las Vegas Strip. The Mirage is all alone in MGM's portfolio on the north end, and won't benefit from any synergies that may take place from most casinos MGM owns in Las Vegas. It's probably the right time to cash in that asset and focus investment elsewhere.

Japan is a potentially redefining development given that Japan could be a gambling market worth tens of billions per year with limited competition. MGM and its partner ORIX have been selected by Osaka to submit a plan to Japan's central government by April 2022, with the potential to win a license sometime next year. If selected, this could be a growth project that leads MGM into the next decade. 

With Las Vegas growing, online gambling going well, and Japan potentially on the horizon, MGM Resorts is hitting on all cylinders, and that's why it's the best performing gambling stock right now.