The U.S. Has a Glut of Casinos!
We are extremely bearish on casinos generally, not just MGM Resorts (MGM). The U.S. seems to have an absolutely massive glut of casinos. What a pathetic country, to invest so much capital in completely unproductive assets. And, shame on the elderly for spending their social security money at these places.
Here are some thoughts from a Credit Bubble Stocks correspondent who has been following the situation:
Casinos are everywhere.
Casinos have hotels and restaurants so they can keep control of suckers during multi-day stays. They have in-house entertainment for the same reason. So casino hotel occupancy rates ad room rates track gambling revenues. During down turns, the hotels are dead weight that helps sink the casino operation.
Ameristar's casinos are in obsolete and/or overbuilt locations. See the data below.
Chicago has at least 11 casinos, including the East Chicago Ameristar and two other nearby Indiana casinos. East Chicago is a rust belt town, but it is just across the border from Chicago. This probably cuts bribery costs. Cool Donald Trump has a new Chicago casino.
Jackpot, Nevada has 4 casinos. It is an obsolete casino location. It shows the pattern of putting a casino in a lawless area to provide illegal services to the less law-abiding residents of a nearby more law-abiding area. It is in the far northeastern corner of Nevada, right at the Idaho border and about 20 miles from the Utah border. It was the second casino boom town in Nevada, after Las Vegas. It is far from any freeway. It is as close as it can be to Utah and Idaho. It "serves" Boise and Salt Lake City.
Alas for Jackpot, Nevada. Idaho has now four Indian casinos.
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