With casinos in the world's gambling capital, Macau – the only place in China where gambling is legal – still burdened by the COVID-19 pandemic, resort operators like Las Vegas Sands (NYSE: LVS) Excessive exposure to the enclave poses a higher risk than peers.
In contrast, some analysts see the city of Las Vegas as a better choice for a strong comeback and with MGM resorts (NYSE: MGM) As the biggest player on the strip with 13 lucky venues, it could offer investors better opportunities for long-term profits.
Still, Las Vegas is not a safe bet for a revival. It faces many of the same problems that Macau has. But MGM still has a number of aces up its sleeve that make it a better casino stock.
While MGM has a large concentration of casinos in Las Vegas, it also owns real estate in the United States, which gives it greater variety.
From Borgata in Atlantic City and MGM Springfield in Massachusetts to National Harbor in Baltimore and MGM Grand Detroit, the resort manager is spread over some of the largest regional markets across the country. It also owns hotels, restaurants, retail stores, convention centers, and golf courses.
Through its 56% stake in MGM China, the company is also active in China, but only accounts for around 10% of sales and 24% of adjusted EBITDAR (EBITDA plus rent / restructuring). In contrast, Sands generates 64% of its sales and 60% of Adjusted EBITDAR from Macau. Wynn Resorts (NASDAQ: WYNN) relies even more on China than on sands.
Sports betting is the real opportunity
MGM Resorts recognized the potential for sports betting arguably before most and is preparing to take advantage of its legalization sooner than most.
For example, the acquisition of Empire Casino in New York prepares to launch into the largest sports market as soon as the state approves it. Because of this, the BetMGM sportsbook app attached to the Borgata is the third largest sportsbook in New Jersey.
The company generated $ 5.6 million in on-site sports betting revenue and $ 25.9 million from online betting in 2020, just behind The Meadowlands racetrack, which partnered with FanDuel and combined 206, $ 5 million in sales, as well as the resorts and DraftKings (NASDAQ: DKNG) Duo, which generated $ 100.9 million.
More and more states are legalizing sports betting, giving MGM a big head start over its rivals. Las Vegas Sands was notoriously against sports betting due to moral objections from its late founder Sheldon Adelson, but is now considering entering the market. However, it can be too little, too late.
Similarly, Wynn Resorts has been late on sports betting, but its WynnBet app is present in two states, has secured access in five other states, and plans to add more.
The risks are still great
While analysts are looking to see the Las Vegas Strip bounce back sharply later this year and continue into the next few, fueling their view that MGM Resorts is the best casino bet, the strict social distancing guidelines and the downsizing could be Capacity required to reopen casinos is keeping consumers away from them just as it is in Macau.
And as strong as MGM is at BetMGM, Fluttering entertainment& # 39; s (OTC: PDYPF) FanDuel and DraftKings are way ahead of everyone else, holding roughly three-quarters of the US sports betting market nationwide.
Still, MGM Resorts has put together the pieces for its own sports betting empire as more states open up, not to mention online casino games could be vital until the coronavirus pandemic is behind us once and for all.
For these reasons, investors should forget about Las Vegas Sands and perhaps not go all-in, but place their bets on the better casino – MGM Resorts.