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Without a doubt, Las Vegas is the gambling capital of the US, raking in millions of dollars a year on gambling activities alone. But across the globe there is another big gambling city shining in the spotlight, Macau, China. Interestingly, Macau is the only place in China where gambling is legal.
Macau is a former Portuguese colony that is now China’s equivalent to Las Vegas. Personal wealth in this area is great, and residents eagerly want to spend that wealth. Steve Wynn, CEO of Wynn Resorts, realized this would be the perfect spot for a casino and opened Wynn Macau in September 2006. Wynn has experience in the industry, as the owner of the super popular The Mirage Hotel and Casino on the Las Vegas Strip.
Wynn Resorts reported second-quarter 2011 earnings that exceeded expectations. In fact, Wynn Macau is doing so well, there are plans for expansion. The company reported 39% increased revenues in the past year, which exceeds Las Vegas’s revenue increase of only 23%. Executives expect even more of China’s residents to come to Wynn Macau to relax and gamble, providing a potential goldmine for investors.
For those interested in investing in Wynn Macau, instead of purchasing stock outright, there are two options:
- Buy stock in the January $165 call before it expires in 2013, now set at $29.20 a share.
- Sell puts. The August $150 put traded at $2.28. Investors get to keep the money when the put is sold, if the stock stays above the strike price. It if falls below the strike price, the investor must buy the shares.
Although Wynn Macau isn’t the only casino in the area, it has a solid grip on the high rollers and they know what customers want.