Adelson splashes the pot in Asia

Sands China’s weak debut in Hong Kong - a first-day drop of 10 percent – was the fourth-worst launch on that market this year, but came as little shock to analysts who were betting against the Asian gambling play. Rival Wynn Macau is down 5 percent since listing in October.

Sands China’s $2.5 billion IPO wasn’t helped by the default tremors kicked off by Dubai, which has helped to expose a whole new area of risky bets in emerging markets.

“The fever for casino stocks is seen to be over now,” said Patrick Yiu, a director at CASH Asset Management. “Investors are worrying about the industry outlook, especially keen competition, when more casinos are ready for business.”

“We’re not in this for a day’s trading, we’re in it for the long term,” Las Vegas Sands CEO Sheldon Adelson said.

So is this a time to hold ‘em, fold ‘em, walk away or run? Adelson clearly is not counting his money while sitting at the table, and there will be many who argue that betting against the Chinese appetite for gambling never made anyone rich. More likely, fund managers will look for more attractive price points to place their bets, while Sands plays with house money.

Missing Lady Luck

CityCenterThere was a time not so long ago when “smart” investors and analysts believed that casinos were a sure bet, that gambling was recession proof, and that it was a vice people could not shake off even if money got tight. And so casino giant after casino giant started on mega projects that set to outdo each other and make glitzy Las Vegas, well, glitzier. 

This recession is changing several of those plans. And despite the retirees putting their life savings into slot machines for fun in Atlantic City, casinos are taking a hit. 

MGM Mirage, one of the biggest of them all, is trying to come up with funds amid a sharp downturn. The company, which is controlled by billionaire Kirk Kerkorian, is hoping to raise money to meet debt payments and also to fund CityCenter, a troubled project it jointly owns with Dubai World, in Las Vegas.