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business newsWill New Gaming Regulations in Nevada Mean Explosion in Gambling Revenues?
Casino companies such as Wynn, MGM, Boyd Gaming, and Pinnacle Entertainment could see new forms of revenue with the change in gaming laws.
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Unemployment is over 9% and could be headed higher when we receive the results of the July jobs report. Congress is playing a game of chicken with our AAA credit rating. The deficit is soaring and if a deal does not get done soon, the U.S. will soon be Greece. Consumer confidence is low, business confidence is low, and nobody feels particularly happy.
Despite all of these problems, the NASDAQ continues to make new 10-year highs, the S&P 500 is above 1,300, and the Dow is firmly over 12,000. Investing is not the same thing as gambling, but at the end of the day, you're making an educated bet on a direction of a particular security. Heck, the Federal Reserve, with its policies, has told you to bet on stocks going up because it wants them to. Betting on a particular security has made more people wealthy in the past few years due to the stock market.
This begs the question: Is betting the way to prosperity?
A change in Nevada gaming laws will now allow casinos to take bets on a variety of different things, other than sports, horse racing and of course, games of chance. "This will open the door," said Johnny Avello, the director of the race and sports operations for the Wynn (WYNN) and Encore casinos.
As sports betting has increased, other gaming revenues have fallen. But we could see a new rise of gambling wagers in Vegas that may alter how we perceive gambling in this country. Britain has long been known for having bookies take bets on anything and everything, but with entrants, including Cantor Gaming, a subsidiary of New York investment bank Cantor Fitzgerald & Co., and William Hill PLC, a big London-based bookmaker, we could see that kind of gambling here.
Wall Street got filthy rich creating many different types of derivatives on all kinds of products, including CDOs, CLOs, ABSs, MBSs, and a host of other alphabet-soup products. Perhaps the key to wealth in this country is to figure out who will be the the singer of the next James Bond theme song or who wins the Oscar for best male actor.
"It could be like horses, where you get to pick favorites and long shots," said Cantor Gaming Chief Executive Lee Amaitis."I think you can build up momentum around that." He cited two key criteria: "Can the event be effectively regulated, and does someone have an advantage in knowing the outcome to give them an edge?"
With the way society is changing, it looks as if hard work and determination are not the keys to wealth anymore. Just make a bet and hope you're right.
ACTION ITEMS:
Bullish:
Traders who believe that gambling growth will explode because of these new regulations might want to consider the following trades:
- Consider the casinos, which will see new forms of revenues. Names like Wynn, MGM (MGM), Boyd Gaming (BYD) and Pinnacle Entertainment (PNK) should do well.
- Short hard work and determination. It seems as if those qualities, which were once admired and respected, do not matter anymore. Just place a bet and hope you get lucky.
Editor's Note: This content was originally published on Benzinga.com by Jonathan Chen.
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