Last week's $7.9-billion merger agreement between MGM Mirage
Gaming is a trend -- not a fad -- and Las Vegas is the Mecca. Widespread growth in both riverboat and Native American-owned casinos has created new generations of gamblers, an increasing number of whom make the trek to world's gaming and adult entertainment capital on a regular basis. That, along with a wave in gambling- and Vegas-centric shows -- including Lakes Entertainment's
And through rewards programs, geographically diverse casino operators have begun to leverage the power of Las Vegas well.
Such cross-market play jumped 23% company-wide last quarter, sparking an impressive 13.3% increase in revenues and a 45.7% gain in operating income at Harrah's Southern Nevada properties last quarter. However, Harrah's is merely able to offer its two sub-premium properties in Harrah's Las Vegas and the once-powerful Rio off-Strip.
On the other hand, the new MGM Mirage will have substantially more drawing power to Las Vegas. From Bellagio to the red-hot Mandalay Bay, MGM Mirage hits the broad range of premium thrill seekers from the more mature to the young and hip. And its properties now span the meat of the Strip, from the Treasure Island at center Strip (across from The Venetian) all the way to the south at Mandalay Bay.
It doesn't stop there, either. Wynn Resorts'
And all of this only makes MGM and Mandaly's properties outside of Nevada more valuable to Las Vegas. Aside from Detroit, where either MGM or Mandalay will be forced to sell a property due to local gaming restrictions, there is no overlap between the two premium operators. Mandalay's 50%-owned Grand Victoria is the market leader in the $2 billion Chicagoland market, and its Gold Strike combines with Harrah's soon-to-be-acquired Horseshoe property to control the most valuable cluster in the Tunica, Miss. market.
MGM Mirage also owns the Beau Rivage along the Gulf Coast of Mississippi, and half of the new Borgata in Atlantic City.
Sure, MGM Mirage will pile on debt to make the acquisition. However, any comparison to Trump Casinos and Hotels
Fool contributor Jeff Hwang owns shares of Lakes Entertainment.