MGM Resorts International (MGM) Needs to Catch a Break: Las Vegas Sands Corp. (LVS), Melco Crown Entertainment Ltd (ADR) (MPEL)

The factor that could make MGM a big hit
Online gaming is the X-factor for MGM going forward, even more than Cotai. Nevada, Delaware, and New Jersey have all passed online gaming bills, and it’s likely we’ll see some form of online betting before the end of the year. MGM is poised to be one of the big winners because of its sprawling list of casino assets and strong gaming brands. It also has a partnership with Boyd Gaming and bwin.party, which will create a huge network of players with little upfront cost for MGM.

But MGM had to exit the Atlantic City market because of its ties to Pansy Ho, its partner in Macau. It’s unclear if that will keep the company from entering the market in New Jersey; my guess is it will. MGM needs expanded online gaming to more states and even a federal bill to make a big impact from online gaming. For that, MGM needs to catch a break.

Foolish bottom line
MGM still has tremendous upside given its financial leverage, but that adds risk for investors. To be a big winner, the company needs to see Las Vegas gaming grow, complete its Cotai project on time, and see an expansion of online gaming. Cotai will only take time, but the other two are far from certainties in the current market. MGM is a high-risk, high-reward bet in gaming — one I’m ready to take.

The article MGM Resorts Needs to Catch a Break originally appeared on Fool.com and is written by Travis Hoium.

Fool contributor Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned.

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