Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| Industry
Overview -- Gambling/Hotel Casinos |
Published: May 1, 2006
Anyone who has visited a casino
has probably seen firsthand just how boisterous and exciting they can
be: slot enthusiasts busily pumping coins into their favorite machines,
roulette players eagerly stacking piles of colorful chips on the table,
enthusiastic craps players encouraging the dice to bounce their way.
With throngs of people either testing their luck or crowding around the
tables waiting for an open spot, every square inch seems to be buzzing
with activity.
In even the slowest and least popular casinos, vast amounts of cash are
changing hands virtually every minute of every day. Occasionally, Lady
Luck decides to smile on the players, allowing high-fives around the
blackjack table, or screams of joy from a fortunate slot player who manages to line up just the right combination of symbols. At the end of
the day, though, the vast majority of the chips always manage to find
their way back to the dealer's side of the table.
Rather than fighting the house at its own game, we believe investors
should harness the
power of its immutable mathematical advantage within their own
portfolios.
Casinos Hit the Mainstream
Over the last decade, casino gaming has become an increasingly
mainstream -- and socially accepted -- form of recreational
entertainment. At one point in time, the industry was handcuffed by
political concerns and legal restrictions, with casino owners only
allowed to conduct business in two places: Nevada and Atlantic City.
However, cash-strapped states have since turned to casino gaming as a
reliable source of tax revenues, and the introduction of new gaming
jurisdictions has allowed casinos to spread throughout the heartland of
the U.S.
Those sweeping changes have created a profound shift in the industry.
First, favorable legislation has opened up a number of profitable new
markets for casino operators -- from Pennsylvania to the Gulf Coast. At
the same time, the proliferation of riverboats, tribal casinos, and
racinos (casinos that operate within horse racetracks) has introduced
gambling to the masses, creating tens of millions of avid new customers.
As the table below shows, gaming is no longer limited to the far corners
of the country. Each of the cities/regions listed below now rakes in
more than half a billion dollars in annual revenues from gamblers.
| Gaming
Market |
2004
Revenues |
| Las
Vegas Strip, NV |
$5.3B |
| Atlantic
City, NJ |
$4.8B |
| Chicagoland,
Ind./Ill. |
$2.3B |
| Connecticut
(Indian) |
$1.6B |
| Tunica,
MS |
$1.2B |
| Detroit,
MI |
$1.2B |
| Biloxi/Gulfport/MS |
$0.9B |
| Reno/NV |
$0.9B |
| Lawrenceburg,
Ind. |
$0.8B |
| St.
Louis, MO |
$0.8B |
| Shreveport/Bossier,
LA |
$0.8B |
| Boulder
Strip, NV |
$0.8B |
| Kansas
City, MO |
$0.7B |
| Downtown
Las Vegas, NV |
$0.7B |
| New
Orleans, LA |
$0.6B |
| Laughlin,
NV |
$0.6B |
| Black
Hawk, CO |
$0.5B |
Gaming's International
Reach
While the popularity of gaming continues to expand throughout the United
States, it is by no means limited to our borders. Just as domestic
players have more choices now than ever before, those overseas can also
try their luck in exotic destinations ranging from Cairo to Moscow.
Though casinos have long been a fixture throughout Australia and Western
Europe, outdated gaming laws have recently been relaxed in several
places -- including the heavily regulated United Kingdom market. At the
same time, a number of countries are counting on the construction of new
casino resorts as a surefire way to boost tourism, which will soon pave
the way for foreign development in untapped regions such as Singapore.
Perhaps the most promising market is Macau, a former Portuguese colony
located just west of Hong Kong that is widely considered to be the
“Las Vegas of the East.” As the gateway to China, Macau is poised to
cash in on the rapid economic expansion of the world’s most populous
nation. Over three billion people live within a short five-hour flight,
and since the Chinese government loosened travel restrictions several
years ago, tens of millions of visitors have poured into Macau from the
mainland (where gambling is strictly forbidden).
Once a seedy playground for high-rollers, foreign developers are rapidly
transforming the region into a world-class tourist destination. In May
2004, Las Vegas Sands (LVS) became the first American company to
enter the market. And based on the runaway success of its Sands Macau
property, the firm is now planning a $1.8 billion recreation of its
famed Las Vegas Venetian resort. The lavish 3,000 suite hotel will
feature two dozen gourmet restaurants, a full-service spa, a
waterfall-splashed tropical pool area, and several million square feet
of convention, gaming, and retail space.
The property will anchor an ambitious development project along the
Cotai Strip -- a reclaimed area of land between the Macanese islands of
Coloane and Taipa -- that will soon boast seven upscale casino resorts.
Despite the explosive growth of the area over the past few years, the
number of firms licensed to conduct business in Macau has remained
fixed. Along with Las Vegas Sands, MGM Mirage (MGM) and Wynn
Resorts (WYNN) are among the select few to get their foot in the
door, and both are currently constructing luxurious waterfront resorts
in the area.
Last year, more than 17 million visitors flooded into Macau's casinos,
and this total could easily double to 35 million within the next several
years. And with Asian players generally wagering far more than their
American counterparts, table games in Macau typically outperform those
in Las Vegas by a wide 6-1 margin. As a result, gaming revenues in Macau
soared more than +40% to $5.1 billion last year. Given the burgeoning
growth of the Chinese middle class, this total is expected to rise at a
phenomenal +22% annual clip over the next five years.
Going forward, global casino revenues are expected to grow at a brisk
annual rate of +8%. At that pace, worldwide gaming receipts should top
the $100 billion mark by 2009 -- one-third of which will be generated in
foreign markets. And given the heavy consolidation that has taken place
in the gaming sector over the past few years, the spoils will be spread
among a relatively small number of global players.
With the popularity of gaming rising to new heights, now might be an
opportune time to ante up and bet with the house. With all this in mind,
throughout the remainder of this article I’ll provide you with an
analysis of the world's leading casino stocks. I'll also take an
in-depth look at
two of my favorite investment ideas in this booming industry . . .
Editor's
Note:
Throughout the remainder of this article, StreetAuthority.com founder
Paul Tracy and his staff provide an in-depth analysis of some of the top
players in the casino industry. To view the remainder of this article, you'll need to
subscribe to our premium Market Advisor newsletter. Please
visit one of the following links to continue . . .
Good investing!
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
| To
receive in-depth guidance on today's leading investing
opportunities each month, plus access to five model
portfolios, please subscribe to Paul Tracy's premium investment
newsletter -- the StreetAuthority
Market Advisor. |
Paul Tracy
founded StreetAuthority and became Chief Investment Strategist in 2001. Prior to
that he spent several years as Managing Editor at a multi-million dollar
financial publishing firm with over 150,000 subscribers. In addition to
his role as managing editor and lead financial writer, he was also
responsible for equity research and managing a team of seasoned
professional financial writers, researchers and market commentators.
Paul's previous experience
includes a position at Robert W. Baird & Co.'s full-service
brokerage operations as well as economic research work on a Money and
Banking project funded by the National Bureau of Economic Research. He
has also spent time doing outside consulting and research for the
University of Virginia, has appeared as a guest expert on several
prominent financial radio shows, and has been a featured speaker at
various investment conferences across the U.S.
Paul graduated with a B.S.
in Finance and Management from the McIntire School of Commerce at the
University of Virginia.
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