Las Vegas is back, and it's just in time for some of the companies relying on a recovery. In May, the Las Vegas Strip saw gaming revenue climb 6.4%, to $505 million, and for the last year, revenue is up 4.3%, to $6.33 billion. 

This is in stark contrast to regional gaming, where casinos across the country are seeing revenue declines because of fierce competition. But Las Vegas plays a different game, drawing customers in for the party, and getting them to gamble while they're there. It's also more expensive to increase supply on the Las Vegas Strip, which has helped keep supply level since the financial crisis.

The next step
The top end of the market has been doing well over the past two years, and Las Vegas Sands and Wynn Resorts have been the beneficiaries. Las Vegas Sands's Las Vegas revenue was up 7% in the first quarter, while Wynn's was up 6.6%. But MGM Resorts and Caesars Entertainment haven't seen the same success in the lower end of the market.


MGM's domestic resorts saw just a 0.6% rise in revenue, and Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur, and Circus Circus all saw revenue decline. At Caesars, Las Vegas revenue was down 2.6%, and property EBITDA fell 6.3% in the first quarter. The top end of the market may still be driving revenue gains across The Strip, but with revenue up 6.4% in May, the second quarter should be much better.

Is this a long-term trend?
Are the dark days finally behind MGM and Caesars, which have the most riding on success in Las Vegas? I think MGM's road to recovery is well on its way, and its $13.9 billion in debt will actually provide positive leverage as The Strip's revenue recovers.

Caesars will also benefit, but $21.3 billion in debt is a lot to overcome, especially when over half of its business is in the faltering regional market. To make matters worse, the spinoff of online gaming, Planet Hollywood, and a project in Baltimore will put the "old" Caesars in terrible financial shape. 

The way to play Las Vegas today is with MGM, which is clearly a better growth company than Caesars, and has less debt to contend with.

The gaming industry has been a growth space since the financial crisis, and Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering even more truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

The article Las Vegas Recovery Finally Taking Hold originally appeared on Fool.com.

Fool contributor Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Add a Comment

*0 / 3000 Character Maximum