VanEck Vectors Gaming ETF

Casinos’ popularity is growing. This suggests that people like to gamble occasionally. Unfortunately, they don’t always win. For most of the people, the real fun is playing the game—not necessarily winning.

Texas Pacific Group and Apollo Management took Harrah’s Entertainment, now Caesars Entertainment, private in a leveraged buyout deal valued at $30.7 billion in 2008.

Pinnacle Entertainment (PNK) has a massive debt-to-equity ratio of 15.4. This indicates that PNK is very aggressive in financing its operations with debt.

Xi Jinping—the Chinese President and General Secretary of the Communist Party—recently launched an unprecedented anti-corruption campaign. This campaign investigated and prosecuted hundreds of officials across the nation.

Casino gambling is spread across major destinations around the world. Casinos, at major destinations, are being influenced by certain factors. This is hampering industry growth.

The casinos in the Las Vegas Strip clearly benefit from high-end Baccarat play. Over the last four years, Baccarat revenue ranged from 43.5% of table games revenue in 2011 to 48.2% in 2013.

Scientific Games expects to achieve ~$220 million in cost synergies and $25 million in capital expenditure savings by consolidating operations.

Pinnacle Entertainment’s compounded annual growth rate of adjusted property EBITDA over a three-year period ending on December 31, 2013, stood at 20.2%.

As of November 28, 2014, Pinnacle Entertainment’s one year forward EV/EBITDA stood at 9.2x compared to its peer group average of 7.6x.

Melco Crown Entertainment’s mass market table games segment is still the major driver in Macau. In 2014, Macau’s visitation increased by 7.5% YoY.

Pinnacle Entertainment (PNK) has approximately 59.2 million outstanding shares, with free float of 57 million shares. Institutional investors hold around 122% of the float.

Macau’s gaming slowdown may continue into 2015. It’s due to a lack of new resorts. Macau’s casino gambling revenue is expected to keep declining until mid-2015.

Casino operators may want to add more non-gaming amenities in 2015. This will strengthen customer spending after a year of slow casino revenues.

US casino operators are considering REIT spin-offs to achieve higher valuations. Real estate is a main income source. REITs distribute at least 90% of their taxable earnings to shareholders.

New Jersey allows gambling on casino games and poker. Currently, it dominates the market. It has ~90% of total US online gaming revenue.

On December 22, 2014, CZR and Caesars Acquisition Company (CACQ) entered into a definitive agreement to merge in an all-stock transaction.

The initial term of each lease will be for 15 years with four five-year renewals. CZR will guarantee payments and performance of the OpCo’s obligations.

In its merger agreement with Bally Technologies, Scientific Games agreed to acquire all outstanding Bally common stock for $83.3 cash per share.

The executive management team of SGMS includes President and CEO Gavin Isaacs and Executive Vice President and CFO Scott Schweinfurth.

Pinnacle Entertainment’s gaming revenues represented 89% of total revenues generated by the company for the trailing twelve months ending September 30, 2014.

Capital employment Casino companies fund their acquisitions with a significant amount of debt capital. ROIC (return on invested capital) is an important metric that shows how effectively a company makes use of its capital. To calculate ROIC, divide EBIT (earnings before interest and tax) by the employed capital. A higher ratio denotes that more profit […]

Las Vegas Sands’ adjusted property EBITDA at Marina Bay Sands in Singapore doubled, reaching a property record of $518.5 million, up ~100% year-over-year.

WYNN’s VIP table games drop in 4Q14 was $20.7 billion, 39.9% lower than 4Q13. Drop is cash and net markers issued and deposited in a gaming table drop box.

WYNN’s adjusted property EBITDA fell a whopping 29.3% year-over-year to $352 million, the biggest year-over-year fall since the second quarter of 2009.

Established in 2004, Melco Crown Entertainment (MPEL) owns, develops, and operates casino gaming and entertainment resort facilities. It’s focused on Asia.

For the full year ending December 31, 2014, Melco Crown Entertainment reported net revenue of $4.8 billion—down 5.9% YoY.

Rolling chip volume refers to the amount of non-negotiable chips wagered and lost by the rolling chip market segment. It’s largely represented by VIP players.

Wynn Resorts (WYNN) earns its revenues through casinos, hotels, food and beverages, and entertainment and retail operations.

Scientific Games agreed to buy WMS Industries for $1.5 billion, emerging as a global supplier of lottery equipment and slot machines to casinos.

MPEL derives ~94% of revenues from casino operations. Its casino business gross margin is 50% for the trailing 12-month period ending September 30, 2014.

Melco Crown Entertainment has two casino-based operations—City of Dreams and Altira Macau—and noncasino-based operations at its Mocha Clubs.

Members of management owning shares of their company shows confidence in the firm’s direction and outlook.

Price performance Let’s explore the five-year share price performance of Melco Crown Entertainment (MPEL) relative to its peers, as well as the broader market that includes SPDR S&P 500 ETF (SPY). Share prices of gambling stocks collapsed heavily over the last three to six months. This drop largely resulted from the Chinese government’s crackdown on corrupt officials, which negatively […]

On a year-over-year basis, real disposable income increased 2.9%. More disposable income boosts consumer buying power.

China’s disposable income per capita remained almost flat at 6,800 Chinese yen on a YoY basis for the three months ending in December 2014.

An overview of Las Vegas Sands (LVS) shows that the company currently owns 70.1% of Sands China Ltd., which operates LVS’s four Macao properties.

Today, a number of US-based casino companies have operations in foreign markets—like Macau. Also, they’re developing new properties in Macau.

The Macao region relies heavily on the Chinese mainland, as it garners the huge majority (about 67%) of its visitors and VIP gamers from China and its neighboring countries.

The current ratio for Pinnacle Entertainment (PNK) had declined severely to 0.7 as of September 30, 2014, from 2.9 as of December 31, 2012.

Wall Street analysts expect Pinnacle Entertainment’s adjusted net profit for 2015E to be about $92 million with a growth rate of 34.9%.

Pinnacle Entertainment (PNK) incurs direct costs in gaming, food and beverage, lodging, retail, entertainment, and other areas.

Recently, Caesars Entertainment (CZR) closed down its profitable Atlantic City casino Showboat, which had operated for 27 years.

Caesars Entertainment’s first trade day was one of the best initial public offering performances in the history of the U.S. stock market.

The development of gaming entertainment can create tens of thousands of jobs. It can generate substantial amounts of tax revenue. Gaming can attract massive amounts of foreign investment. It can also create tourist destinations. The market is expected to grow in the future.

Casino tourism revenues can provide major benefits for cities and entire countries. As a result, governments want to encourage and attract casinos. The potential for tax revenues is one of the main drivers behind the growth in the casino industry. National and state governments worldwide are more willing to legalize and license online gaming operators.