Wynn and Sands Susceptible to Macau Gambling Slowdown

Photo of author

By Jacob Maslow

Macau Casino Resort - Wynn
Wynn Casino Resort in Macau

If you are looking for gambling stocks to get into, some of the most solid stocks you should invest in are Wynn (NASDAQ:WYNN) and Sands (NYSE:LVS). Sands, of course, owns The Venetian as well as other properties in Las Vegas and Macau. Wynn is also big in Las Vegas and Macau. These two gaming corporations make money hand over fist, thanks primarily to their growth in Asia. While Las Vegas can still be somewhat wobbly as far as gaming receipts go, these gaming corporations’ Asian operations have always been a steady source of revenue over the past few years. Well, not anymore.

Thanks to an ongoing corruption crackdown in China, a lot of high rollers who used to fly into Macau for high stakes gambling have stopped coming. Pair this with a general economic slowdown in China that has led to its GDP growing at its slowest rate in over two decades, and you can see why gambling revenues from Macau is beginning to drop off. There have been a lot of rumors of layoffs floating around Macau. This all, of course, doesn’t spell well for Wynn and Sands.

Both these companies have been expanding aggressively. Sands, in particular, has spent quite a bit of resources expanding into Singapore. It remains to be seen whether or not these companies’ stocks will continue to decline. I suggest that once they get close to the bottom, you might want to get in.

As the Asian overall economy improves, these companies’ Asian operations might start pumping more life into their bottom lines, which can inflate their respective stock prices. Of these two, the stronger bet would probably be Sands. Sands has a stronger infrastructure and appears to be better invested for a long-term future, both in the U.S. and Asian markets. With that said, if there is an economic crisis in the offing, or if the U.S. economic recovery stalls, all bets are off regarding these two and other gambling stocks.

Images Courtesy of DepositPhotos