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| Opportunities & Exposures |
High Rollers
Caroline Waxler
08/02/2004
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The term “gambling sector” seems almost a misnomer lately. For investors, it
may be close to a sure thing. According to the Smith Barney Gaming Index,
casino-operator stocks were up 26 percent and gaming-equipment maker stocks were
up 18.6 percent in the 12 months ending in April.
Our society is in love with
gambling. Televised poker tournaments are suddenly the darlings of cable TV.
Even self-described paragons of virtue find they are not immune—morality czar
William Bennett has reportedly gambled away millions. According to Eugene Martin
Christiansen, CEO of gaming consultancy Christiansen Capital Advisors, gamblers
lost $38 billion to casinos last year in the United States. Domestic movie
tickets sales totaled only $9.3 billion.
The smartest way to become involved
in the gambling industry is to invest in an experienced casino development
group, many of which are run by former casino executives. Some of the most
promising opportunities involve buying an established casino-hotel resort, or
investing in the development of a new casino—although we should wait until after
the development group obtains it gaming license. (Bear in mind that licensing
officials require investors to provide complete financial disclosure,
Christiansen warns.)
Sheldon Adelson is the poster child for successful
private casino investors. He acquired a casino property and transformed it into
the Venetian, now a hot spot on the Las Vegas Strip. Christiansen says that at
Adelson’s current rate, the Venetian will have $400 million in free cash flow
this year—a record for any casino in the world.
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