Proposed Japan resort. Source: MGM.

When it comes to gambling, betting on the house is usually the smart move. Yet for MGM Resorts (MGM -1.17%), the gaming industry has been a tough environment lately, as the company's ill-timed moves to expand in Las Vegas sent it into considerable debt at the worst possible time during the financial crisis. Ever since, MGM has struggled to recover lost ground, laboring under the weight of its domestic exposure even as rivals Las Vegas Sands (LVS 0.23%) and Wynn Resorts (WYNN -0.74%) have benefited from their greater exposure to the Asian gaming mecca of Macau. Let's take a closer look at MGM Resorts to see if it's the right sin stock to add to your portfolio.

The challenge that MGM Resorts faces

Overall, the biggest problem that MGM Resorts has had to deal with is having less exposure to the high-growth Macau market than peers Wynn and Las Vegas Sands. Even as its two main competitors get roughly two-thirds of their overall sales from the Asian gaming center, MGM got less than 40% of its total revenue from Macau last year. By contrast, MGM has put its bets on a recovery in the Las Vegas market, and unfortunately for it, Vegas has been slow in bouncing back from tough times during the 2008 recession. Even now, gross gaming revenue in the overall Las Vegas market is projected to lag behind its peak levels in 2006 and 2007, and it would take a strong year in 2015 for Vegas to surpass its previous records.

MGM Macau. Source: MGM.

Recently, though, what had been MGM's weakness has been its strength, as some investors have called into question the sustainability of Macau's growth. Yet if Macau does start to weaken, then MGM could be a victim of its bad timing once again, as the company currently expects to open another resort in the popular Cotai Strip area of Macau within the next two years. With both Wynn and Las Vegas Sands still looking to expand in the area as well, however, MGM faces an uphill battle to hold its own in the increasingly competitive Macau market.

MGM hasn't given up on other international growth opportunities, though. The company has pushed hard to build a presence in Japan, where lawmakers are seriously looking at overturning laws that currently prevent casino gambling in the island nation. Even as Wynn, Sands, and other major casino players make their own cases to build a presence in Japan, MGM wants its proposed project in Osaka to include not only gaming but also entertainment, food, and other potentially lucrative activities.

Coming home

Nevertheless, MGM is still deeply committed to the domestic gaming market. After its disastrous CityCenter project in Vegas, MGM has worked hard to move forward with more successful initiatives in America's gaming capital. With so many well-known properties on the Las Vegas Strip, including the Bellagio, Mirage, and its landmark MGM Grand, MGM resorts is arguably in the driver's seat when it comes to any rebound in the mainstream Vegas gaming market. In particular, MGM has done well at milking more revenue from ancillary non-gaming sources, with improving hotel room rates and occupancy levels having an especially favorable impact.

MGM's Mirage. Source: MGM.

Outside Vegas, MGM has had mixed results. Prospects for an MGM casino in western Massachusetts have some investors excited, although the rush among various states across the country to embrace gaming could simply have the effect of further cannibalizing existing properties. Already, New Jersey's Atlantic City has buckled under the competitive pressure of casinos in nearby Philadelphia as well as Connecticut and Maryland. MGM will have to be careful to coordinate its efforts to make sure its future investments are productive rather than destructive to its present business.

All in all, MGM Resorts is among the riskier sin stocks for investors right now, because there are so many variables that could have an impact on its future. Despite the opportunity to capitalize on a renaissance in the U.S. gaming market, MGM investors could have to endure a rocky ride in the stock price as the company aims at fully rehabilitating itself.