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Macau Outperforms Las Vegas in International Gambling Scene

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In the ever-changing world of international gambling, Macau appears to be coming up trumps over Las Vegas. With Vegas reportedly lacking the momentum brought by big events and Macau showing potential for substantial visitor return, it seems that casino operators that have rooted their enterprises in Macau might have an advantage over the next year. This edge comes largely from Macau’s increasing traffic, which is already faring better than its toll taken by the pandemic, compared to that of its American counterpart.

Analyst Zachary Warring of CFRA Research, in a recent statement, has displayed a favor towards Macau-based gaming outfits over those based in the US. He attributes this preference to the soaring visitation to Macau, which he anticipates could outdo operators in Las Vegas within the next year. Given that Macau received a mere 389,390 visitors back in December 2022, the sharp 395% rise in visitation in 2023 seems remarkable, even if it represents just over 71% of 2019 levels. Warring feels optimistic that by the fourth quarter of 2024, visitation to Macau might match, if not surpass, previous records.

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Prior to the pandemic, the ascendancy of annual visits to Macau seemed unstoppable, peaking at an impressive 39.40 million in 2019. But, following a moderate slump in 2023, it’s worth noting the considerable gap that needs to be covered for Macau to regain its pre-pandemic glory. Should it manage to do so, the gaming sector in Macau stands to profit.

Warring expressed a particular interest in three Las Vegas-based giants—Las Vegas Sands (NYSE: LVS), MGM Resorts International (NYSE: MGM), and Wynn Resorts (NASDAQ: WYNN)—each of whom hold substantial stakes in Macau. LVS, in particular, seems poised for success. The behemoth recently marked two decades for their Sands Macau operation by securing five integrated resorts on the territory.

Operational advantages, such as an emphasis on premium and mass-market gamblers, along with a diverse non-gaming portfolio, should position Sands favorably. Plus, the Vegas titan’s intention to procure a New York City casino license and pay off its debt rather than refinance it should buoy investor confidence.

While Las Vegas’ economic revenue may have enjoyed a boon from last November’s Grand Prix and February’s Super Bowl, estimates putting the joint financial windfall at around $2.1 billion, it seems much of that financial success is already priced into shares.

Warring argues that Vegas’ recent growth owes much to these two mega events. But, with them now in the past, there’s little to indicate similar growth for the city moving forward. Even the highly anticipated return of the Grand Prix in November may not spark a similar surge in visitor numbers and, by extension, room rates.

Rival operator Caesars Entertainment (NASDAQ: CZR), which doesn’t possess Macau exposure, might be viewed purely under the lens of investor sentiment regarding Las Vegas, regional casinos, and online gaming. While Caesars’ hefty debt could indicate a potential value trap, Warring noted that the gaming giant may sell underperforming assets to reduce obligations. Nevertheless, the consensus seems to be that the growth potential for Caesars, as well as other Vegas-rooted businesses, might be in jeopardy.

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