But MGM Resorts International (NYSE:MGM) isn’t ready to commit entirely to online gambling, at least not yet. It’s applied for licenses for online gaming in Las Vegas and New Jersey, but unlike Caesars, it’s not prepared to launch an online poker website in Nevada, where internet poker is perfectly legal. It’s waiting to see how regulation shapes up in the online playing field first.
It’s still expanding, though, and is building in places like Macau in China, where it’s constructing a $2.6 billion resort and casino on the Cotai strip that should open in 2016. This turnaround story is still unfolding, but given MGM Resorts International (NYSE:MGM)’s presence in Macau, the world’s largest gaming market, and the company’s recent return to profitability, this business is worth watching. Let’s just hope it doesn’t wait too long and miss out on market share in the competitive online gambling arena in the process.
Making a dent
Las Vegas-based Boyd Gaming Corporation (NYSE:BYD) is saddled with $3 billion in in debt, but the company is taking steps to reduce its burden. In recent days, it issued 16.5 million shares in an equity offering, where it hopes to raise nearly $200 million. The proceeds are being directed toward debt and general corporate purposes. No doubt the company is in clean-up mode, and its taking steps to strengthen its balance sheet. It recently shed its Dania Jai-Alai business for a pretax gain of $18.9 million.
Nonetheless, Boyd Gaming Corporation (NYSE:BYD) warns in its annual report that any increase in capex would result in an increase in its debt load. In 2012, the company generated $142 in cash flow. The company has earmarked $153 million in capex for 2013 to be funded via a credit facility and cash flow; this compares to $126 million in capex in 2012.
Boyd is positioned to capitalize from online gambling via its partnership with bwin.party, a leader in online gaming in Europe. According to its annual report, Boyd is waiting in the wings for the regulatory green light before offering online poker in the U.S. via the bwin.party brand and possibly newly developed brands as well.
Conclusion
It remains to be seen whether industry standards in the casino industry rise to a level that high-risk gamblers will be warned. But even with a warning label, gaming companies are forging ahead and growing their respective businesses. As long as they continue to address their debts, I would consider anyone of these companies for my portfolio in light of the growth potential that lies ahead.
Gerelyn Terzo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Casinos Face Yet Another Headwind originally appeared on Fool.com and is written by Gerelyn Terzo.
Gerelyn is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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