Casino Industry

Topics: Casino, Macau, Gambling Pages: 5 (1668 words) Published: April 24, 2014
Find out why the Macau gambling scene is so important
-The company intends to use the proceeds from this sale to pay off part of their debt -“The stock has traded significantly higher since the announcement of the deal, but we believe that this is a huge missed opportunity for the company in a new, booming market and will hurt the company over the long-term as competition continues to expand in this area” (2). -Caesars is the largest casino operator in the U.S

-Properties include: Las Vegas, Atlantic City, Indiana, Louisiana, Mississippi, and several other states More on the Macau opportunity, this may be a little outdated: -Only major casino company without a location Macau

-“Caesars bought the 175-acre site in 2007 for $578 million, with plans to develop a hotel and casino, but the company did not apply in the early 2000s for one of the limited number of gambling licenses in Macau, and it never gained a gambling concession from the Macau government” (2) -“As of July 31, 2013, growth in Macau has increased to over 20% on a year over year basis boosted by an increase in the number of Chinese visitors to the country’s only legal casino gambling hub. July’s 29.5 billion patacas ($3.7 billion) revenue was the third strongest figure this year, according to government data, as more middle-class gamblers visited Macau, eclipsing the growth in the number of high rollers. The slowdown in China’s economic growth has kept away some wealthy customers, who often spend 1 million yuan ($160,000) per bet, but it failed to push away Macau’s appeal for China’s rapidly expanding middle-class and their higher disposable incomes” (2) →what are pacatas

Why Maccau Is Attractive for Casino Industry
-The number of visitors to Macau rose 4.2 percent during the first half of the year (in 2013) -“Visitors form mainland China, who account for two thirds of the total numbers, soared 20 percent in July year over year numbers. High rollers account for about 70 percent of gaming revenues, but the share of the middle-class gamers is growing at a much faster rate and Macau’s casinos are trying to diversity entertainment options to attract more of these visitors” (2) -Minimum table bets start at around 300 patacas ($38), compared to a year ago when offering bets for 100-200 patacas ($20) -“In the end, investors should not have seen the sale of this property as a catalyst for the stock, but instead as the huge missed opportunity to diversify the company’s core business and expand into an explosive new market” (2) -because the stock price went up when they sold Macau location -Macau casinos and hotels are now showing strong September gaming revenue -“At the current rate, gambling revenue for the month of September so far is tracking 25.7% higher than the same month a year ago. Macau generates annual gambling revenue topping $38 billion, larger than any other casino district in the world, about five times the annual take of U.S. gambling in Las Vegas” (3) -Macau, a special gaming district on China’s southern coast, is the only place in China where gambling is legal -

-“We believe that the run up in CZR shares has been on the coattails of the other gaming and hotel companies and that the buying has been way overdone. Investors should loko for the stock to pull back substantially after the recent rally” →research if all of this stuff is still true

The most Recent Quarter- Focusing On the Important Aspects of This Business -Most recent quarter is Q2, net revenue was reported by Caesars as $2.2 billion -A decline in casino revenue was “largely offset by increases in F&B, rooms, and managed revenue” -“The company attributes this decline to a combination of macroeconomic conditions, competition, and a shift in marketing strategy. The company has lost market share in gaming to competition, despite the company’s positioning with the World Series of Poker brand” (4) ^ this is about gaming competition

-Alpha research believes that revenue and profits have...
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