The Gaming Industry:
Discussion and Analysis Focusing on MGM Mirage Inc.
MBA810 – Spring 2008
Part I: Industry Analysis
Definition of the Gaming Industry:
The dream of hitting it big has long been engrained in the minds of many cultures, and the casino industry has provided these dreamers with the opportunity to try their luck and have an opportunity to fulfill their fantasies. While they are at it, they may even be provided with first class dining, entertainment, and amenities as casinos add more incentives to visit.
More than a quarter of adults in the United States will visit a casino within a year. With roughly 56.2 million patrons making a combined total of over 371 million trips[1], the scale shows that there is a lot of money moving in this industry. As with any capital and cash-flow intensive industry, there is great regulatory attention paid to gaming.
There are five categories of gaming facilities: Commercial, tribal, racetrack, card room, and electronic gaming device casinos. Since the gaming industry is so greatly varied across national borders, only domestic (U.S.) casinos will be included in analysis and discussed.
Industry History
Although the exact roots of gambling are considered unknown, the first official account of the activity was recorded around 2300 B.C. by the Chinese. It is believed that some form of gambling has been present in every society since all around the world. The French are credited with the invention of playing cards (1387) and the first full deck of cards was printed by a German (1440). [2] Gaming continued to develop in popularity, and in 1765 the first legal casino opened in Baden Switzerland. [3] The founders of the United States were not far behind, as they brought with them horse racing, cockfighting, and lotteries. With the acceptance of wagering on games of chance, gambling houses and halls soon started to develop as gambling’s entry into the mainstream continued. Playing cards were even taxed along with tea in the infamous Stamp Act of 1765.
During the early 1800s gambling along riverboats on the Mississippi and Ohio rivers became popular. These casinos on water attracted high class men who could afford to lose big. When the profits started to be realized these gambling facilities molded into the organized businesses that we are familiar with today. With new games being added, gambling was no longer just for the upper class, and all castes in society took part.
By 1850 New York had over 6,000 gaming establishments, counterweighed by another 1,000 in San Francisco on the opposite coast.[4] It was at this peak that the public perception of gambling changed to from legitimate to immoral as con-artists, cheaters, and scammers tried to take advantage of the businesses. Lotteries were corrupt, and card rooms were manipulated. Most of these gambling halls started to be shut down as states imposed anti-gaming laws, and federal regulation on the industry was brought forth in the early 1900’s.
Immediately following the depression in 1931, gambling was once again legal, in the state of Nevada. The reason for reimplementation is cited as a fundraiser for public schools. The area’s population was experiencing growth due to the number of workers at the Hoover Dam site and the development of the Union Pacific Railroad. As World War II stalled growth, the Las Vegas Strip’s first resort hotel opened in 1941: El Rancho Vegas Hotel-Casino.[5] The success of this casino spawned the development of the world’s largest and most extravagant gaming destination. With Las Vegas and casinos being synonymous, the rest of the industry has been mimicking the size and style of these attractions.
The industry has continued to grow in waves, as new regulations and acceptance of gambling have changed. Today it has evolved into a multi-billion dollar entertainment business that plays an ever important role in the nation’s economy.
Industry Profile
Size of Industry
Gaming does play a large part in contributing to our nation’s economy by creating employment, tax revenue, and providing a service. A study has even found that communities closest to casinos experience 12% to 17% drops in welfare payments, unemployment rates, and unemployment insurance.[6] The size of the industry can be seen in the below table, showing the gross revenues of gaming facilities for 2005, the most recent complete data set available. Gross revenues are calculated by subtracting the total amount of winnings paid from the total amount wagered. This is the equivalent of ‘sales’. This only includes gaming-related revenues, so dining and entertainment income is not incorporated.
Table 1: 2005 Gross Revenues for Gaming Facilities
| Classification | 2005 Gross Revenues (in Billions) |
| Card Rooms | $1.12 |
| Commercial Casinos | $31.85 |
| Charitable Games/Bingo | $2.33 |
| Indian Casinos | $22.62 |
| Legal Bookmaking | $0.135 |
| Lotteries | $22.89 |
| Pari-Mutuel Wagering | $3.68 |
| Total | $84.65 |
Source: Christiansen Capital Advisors LLC
In a somewhat unbalanced fashion, gaming revenues have generated revenue epicenters across the country. The obvious Las Vegas tops the list, yet mega-casinos in more obscure locations such as Iowa, Colorado, and even Connecticut make it into the top 20 casino markets. Timing and severity of state legislations are the major reasons for this occurrence, older gaming locations seem to be more prominent on the list.
Table 2: Top 20 U.S Casino Markets by Annual Revenue
| Casino Market | 2006 Annual Revenues (in Millions) |
| 1. Las Vegas Strip | $6,689 |
| 2. Atlantic City, NJ | $5,508 |
| 3. Chicagoland, Ind./Ill. | $2,595 |
| 4. Connecticut | $1,734 |
| 5. Detroit | $1,303 |
| 6. Tunica/Lula, Miss. | $1,252 |
| 7. St. Louis, Mo./Ill. | $990.98 |
| 8. Reno/Sparks, Nev. | $939.50 |
| 9. Boulder Strip, Nev. | $847.18 |
| 10. Shreveport, La. | $845.20 |
| 11. Biloxi, Miss. | $845.20 |
| 12. Lawrenceburt/Rising Sun/Elizabeth/Vevay, Ind. | $795.13 |
| 13. Kansas City, Mo. | $751.33 |
| 14. New Orleans, La. | $696.47 |
| 15. Lake Charles, La. | $656.85 |
| 16. Downtown Las Vegas, Nev. | $630.29 |
| 17. Laughlin, Nev. | $629.76 |
| 18. Black Hawk, Colo. | $554.48 |
| 19. Council Bluffs, Iowa | $477.96 |
| 20. Charles Town, W. Va. | $448.23 |
Source: The Innovation Group (April 2007)
Major Players
There is a fairly large number of companies operating under the US casinos and gaming sector. Some are small one-room facilities while others are multi-property, multi-billion dollar corporations. Five of biggest players in the space are Harrah’s Entertainment, Las Vegas Sands, Trump Resorts, Wynn Resorts, and MGM Mirage.
The size of these companies can be compared in the below table. Note that these figures include all operations within the corporations, not just straight gaming figures.
Table 3: Size of Major Gaming Companies
| Company | Employees | Sales (in Millions) | Net Income (in Millions) |
| Harrah’s | 85,000 | $9,673.9 | $535.8 |
| Las Vegas Sands | 15,280 | $2,950.6 | $116.7 |
| Trump | 7,300 | $988.2 | ($188.7) |
| MGM Mirage | 67,400 | $7,691.6 | $1,584.4 |
| Wynn | 16,500 | $2,687.5 | $258.1 |
Source: Hoover’s Company Records – Most recent data available used (2007 figures)
It is apparent that these few corporations make up a substantial portion of the billions that flow into gaming facilities each year. It is also apparent that profitability can greatly vary, reflected by a loss on nearly a billion dollars in sales compared to net income representing nearly 20% of sales.
(look for info on life-cycle/stage)
Industry Structure:
Performing an analysis of the casino gambling industry will help to identify external threats and opportunities of the industry environment. The industry analysis will be examined using the Porter’s Five Forces model to assist in defining the position of the casino gambling business by identifying competitive forces. The model will help to develop strategic plans that will identify the (1) risk of entry by potential competitors, (2) bargaining power of buyers, (3) bargaining power of suppliers, (4) threat of substitutes and (5) the competitiveness of the industry. These five forces will breakdown the gambling industry to help identify current conditions.[7]
Exhibit 1: Porters Five Model
Source: Strategic Management
I. Risk of entry by potential competitors:
According to Porter's model, there are many barriers for new entrants that are applicable to the casino industry. "The present greatest barrier is the regulatory and the licensing process."[8] New establishments desiring to enter the market must apply to the state they intend to operate in for a casino license. The government may accept or deny the application for a casino license based on the states' perception of the entertainment value provided by the new entrant as well as other considerations that may arise. Situations where the casino licenses maybe denied is if the state believes the location of the casino will have a negative impact on the general public. For instance, "Pennsylvania Gaming Control Board voted to reject a gambling license for a proposed casino that would have been located less than 2 miles from the historic battlefield."[9] The casino license applicant, Crossroads Gambling Resort and Spa, was viewed by the town as a potential threat to the historical battlefield. The proposal was rejected based on "the design of the facility, as reflected in architectural renderings and plans, would have avoiding any theming or historical architectural references that might detract from or trivialize the Civil War or what once had transpired near Gettysburg."[10] As a result of government licensing regulations, Crossroad Gambling Resort and Spa was denied the opportunity to operate in Pennsylvania which was a barrier of entry for the potential casino resort.
The high number of casinos operating within a state or new entrants applying for a license is another barrier of entry. The selection process "where there are a greater number of applicants than available licenses"[11] can invoke extreme competition. The government can deny applicants a license based on the lack of available licenses for new entrants. Casino licenses can also be denied due to no availability from the high number of casino already operating within the state.
The state government imposes further restraints regarding the issuance of casino licensing that poses barriers of entry for new establishments. There are license qualifications and standards for individuals desiring to enter the market. These standards included a dismissal of license consideration for any applicant believed to be involved in organized crime or experiencing financial difficulties. "Most states that allow private casino gaming require that the license applicant provide reams of paper explaining the history of its business operations. In addition, these applications require personal history disclosures by key persons involved with the applicant's business operation."[12] The rationale for the licensing process is for the state to determine eligible from ineligible candidates, especially in circumstances where there are more applicants than available licenses.
An additional barrier of entry is the excessive fee an applicant must pay in order to participate in the licensing process. For each state, applicants must pay a nonrefundable fee to have their application considered. Licensing fees vary from state to state. For instance, in the state of Massachusetts, "bidders would be required to pay a nonrefundable fee, currently $300,000, to have their application reviewed. They would pay an additional fee, as yet unspecified, to actually bid on a license"[13] In the state of New Jersey, an unlicensed applicant is required to pay a fee "prior to consideration or issuance of a plenary casino license…which is based upon the cost of investigating and considering the application."[14] These high cost non- refundable fees can prevent a new establishment, with low capital available, from entering into the industry.
The excessive licensing fee imposed by the government of each state is another constraint for new entrants. For instance, in Nevada "an applicant must pay approximately $500,000 to $1 million [for a casino license] to cover the state's costs"[15] In addition, the license is valid only for a certain period of time. Within a couple of years, a casino license must be renewed for another high fee. Also, the state of New Jersey requires casinos to pay an annual renewal fee for "the cost of maintaining the control and regulatory activities of the Commission and the Division."[16] These high licensing fees could reduce the ability of potential competitors entering the market.
Not only are high priced licensing fees a barrier of entry for new establishments but also certain locations are restricted from gambling. For instance, in the states of Hawaii and Utah, gambling is prohibited.[17] Therefore, a casino is restricted to operate within the borders of both states which place a barrier on the location of potential competitors desiring to enter the casino gambling industry. However, this barrier of entry is low due to numerous options within the other 48 states which legalized gambling.
In addition, high start up costs associated with casinos is a barrier within the casino gambling industry. If a new establishment desires to enter into this market, the potential competitor must have enough capital in order to fund the project. The cost of opening a casino is very expensive. For example, the startup cost for the new resort in Atlantic City, the Borgata Casino Hotel, was approximately $1.1 billion dollars.[18] If a new entrant wishing to build a casino does not have enough capital to finance the development, it will be challenge the potential entry for the competitor.
Even though there are government regulations and capital restraints, the aggregate of barriers to entry in the casino gambling industry is low. Currently there are many new entrants arising the market who have the funding capability to build casinos. Furthermore, many companies entering the casino market are not denied from opening a casino due to government regulations. These new establishments may be restrained from where to open the casino, but there are many locations and options within the United States for consideration.
II. Bargaining power of buyers:
In today's society, gambling is viewed as a socially accepted affair within our culture. The government's support of gambling, evident by the legalization of the game, influences consumer's behaviors. What was once seen as a deviant behavior is now viewed by consumers as a recreation event. More Americans are able to accept the idea of gambling due to the support within the legal and political environments.[19]
Since gambling is viewed positively by consumers, the casino industry attracts many people. Furthermore, consumers are appealed to gambling because of the game itself. "There is something about the luck of the draw or the throw of the dice that attracts the risk-taking urge."[20] Consumers enjoy the uncertainty of the game as well as the opportunity to increase wealth.
People have a positive outlook of gambling because it provides them with a chance to be winners; therefore individuals who are not "successful at their jobs could be winners at cards"[21] Consumers are also intrigued with gambling since the game can demonstrate their courage and strengths to other individuals. Americans "admire people who take risks and win; it proves one's superiority and master over life."[22] Therefore, gambling is appealing to consumers since it also provides opportunity for power and authority.
Because of the fascination of increasing one's wealth and acquiring power, there are millions of consumers who gamble a year. For instance, "more than 53.4 million Americans visited casinos in 2003, [and] 51.2 million in 2002."[23] Due to the millions of consumers who visit casinos on an annual basis, the barging power of consumers is considered to be moderate. The bargaining power of buyers is high when consumers are few in number and have the ability to reduce the purchase price. Within the casino industry, buyers do not have the ability to set the price. If a player decides to participate in a hand of poker, there is a minimum bet of 20 dollars to enter. The player is limited to the amount that is set by the casino and cannot persuade a lower entry fee.
The bargaining power of suppliers is also considered to be moderate since there are an abundant number of casinos with the United States. For instance, there are approximately 256 casinos in Nevada, 12 casinos in New Jersey, 44 casinos in Colorado, etc.[24] Furthermore, there are countless of Indian casinos where individuals have the option to gamble. There are 2 tribal casinos in Connecticut, 10 in California, 14 in Minnesota, etc.[25] Due to the various number of casino choices where individuals have to gamble, the influence of bargaining that buyers have is moderate.
Also, the bargaining power of buyers is moderate due to the consumer's inability to enter the industry and produce the service themselves.[26] Even though consumers have the power to facilitate a poker game or gambling event from their home, buyers do not have the capability to run a casino operation as large as Mohegan Sun or Foxwoods casino. As a result, buyers do not pose as a threat to the casino industry.
III. Bargaining power of suppliers:
The casino industry is composed of various suppliers of roulette wheels, tables, playing cards, shufflers and other gaming accessories. There are thousands of manufactures and vendors of casino products within the United States.[27] As a result, the market for gaming products is extremely competitive. Main suppliers include International Gaming Technology (IGT), Elixir Gaming Technology (EGT), Shuffle Master (SHFL) and Gaming Partners International Corporation (GPIC). For the comparison of competitor's statistics, refer to the Direct Competitor Comparison exhibit below.
Exhibit 2: Competitor Analysis
| DIRECT COMPETITOR COMPARISON | |
|
EGT = Elixir Gaming Technology Source: Yahoo Finance (http://finance.yahoo.com/q/co?s=EGT)
GPIC = Gaming Partners International Corporation
IGT = International Game Technology
SHFL = Shuffle Master Inc.
The competitive advantage of casino suppliers is product development. Many companies offer similar products, but the main source of competitive advantage is differentiation. Being able to offer consumers with casino machines and accessories that are advanced in technology is an important advantage.[28] Developing new slot machines with unique idea games or how to encompass a dealer game with technology (i.e. Video Poker) is a core competency. However, since most casino supplies are standardized, such as playing cards, shufflers, poker chips, dice, standardized slot machines and tables, there are no significant switching costs for buyers. Casinos can purchase their gambling equipment from various companies with no significant increase in cost. Furthermore, Casinos have the opportunity to lower the purchase price of casino supplies by buying equipment in large quantities. As a result suppliers have very low barging power within the casino industry.
IV. Threat of substitutes:
There are many gambling options presented to individuals. Gambling opportunities for people are available through online gambling, state lotteries, riverboat casinos, Indian gambling establishments, sports wagering and pari-mutuel wagering.[29] These gambling substitutes are closely related to a casino's operating activities and therefore provide a threat to the casino gambling industry. Due to the number of options available for gamblers, the threat of substitute for casinos is high.
Internet gambling consists of "online casinos, in which people can play casino games such as roulette, blackjack, pachinko, baccarat and many others."[30] The online gambling industry has been increasing becoming popular each year. For instance "statistics show that internet gambling has nearly doubled every year since 1997, in 2001 it exceeded $2 billion."[31] Also, it is forecasted for the internet gambling market to reach $125 billion in 2015.[32] The reason why internet gambling is becoming popular is because it provides people with the option to bet from the comfort of their own home. In addition, online gambling provides people the opportunity to place wagers without the use of cash. Gamblers can make bets through the use of their credit or debit cards.
Another option for people to gamble is lotteries which is a threat to casinos due to their popularity. Lotteries are appealing to gamblers because of the low cost of lotto tickets for the chance to win large sums of money. Prices of lotto tickets range from one dollar to twenty dollars for prize amounts up to millions of dollars.[33] Types of games offered by lotteries vary by state but most popular games include bingo, keno, scratch tickets, Powerball and other lottery games. From these games, the state generates millions of dollars. For instance, in the state of Massachusetts, "the lottery is expected to pump more than $900 million in profits into local governments this year."[34] Furthermore, in 2005, gross revenues for lotteries were $22.98 billion. Since lotteries are appealing to gamblers, they are an alternative to gambling at a casino and provides as a substitute for land based casinos.
Additional substitutes for casinos are riverboat cruises. During the 19th century when laws around gambling were tight, riverboats provided people with an alternative to gamble legally. [35] While some individuals used the ship for travelling, others utilized it for gambling. Card games, such as poker, were gambling activities found on riverboat cruises. Once three miles from the shoreline, the ship was considered to be in international waters and therefore, the United States had no jurisdiction.[36] Offshore gambling became increasing popular due to the flexibility of international borders. Currently, riverboat cruises are still popular even though gambling laws within the United States have loosened. As of 1995, riverboat casinos consist of approximately 20 percent of the casino market share.[37] However, as seen in the chart below, land based casinos comprise of majority of the casino market share.
Exhibit 3: 1995 Market Share Chart
Source: Gambling in the United States
Even though riverboat cruises only consist of 20 percent of the market share in 1995, the market for offshore gambling is continuously becoming popular within the United States. As a result, gambling on riverboat cruises provides as a threat of substitute to the casino gambling industry.
Indian gambling establishments is another common substitute. As seen in the chart above (exhibit 3), casinos owned by Indian tribes capture approximately 10 percent of the casino market share in 1995. [38] Furthermore, as of 1995, Indian casinos were located in 22 states. [39] The number of states Indian casinos operate in increased from 22 to 27 states by 2008.[40] As seen from these statistics, Indian gambling establishments continue to grow and increase in number. Consequently, evident from the positive growth of Indian gambling establishments, gamblers enjoy attending these casinos. Therefore, casinos owned by Indian tribes are a substitute and are a threat to the casino gambling industry.
Sports wagering is another substitute for the casino gambling industry. Even though most sports betting is illegal, gamblers still participate in the activity and must be considered as a substitute. Sports' betting is based on placing a wager on what would be the outcome of a sporting event. This type of gambling could be placed with a bookie or between groups of friends. "Sports betting, in particular, is thought to amount to a large sum [of money]. Some analysts think it is the largest category of gambling after casino games." [41] Analysts estimate sports betting to generate approximately $48 billion dollars. [42] Since the revenues associated with sports wagering are significant, it is a threat of substitute for the casino gambling industry.
Wagering on horse races is in another substitute for the casino gambling industry. Each year, millions of people gamble on horse racing. There are many horse racing events to gamble on, the most popular being the Kentucky Derby. Furthermore, many horse racing events include casino slots that have increased revenue for the industry. For instance, revenue for Harrah's Chester Casino & Racetrack, located in Chester Pennsylvania, "increased from $3.4 million in 2006 to $21.7 million in 2007, due to the infusion of slot revenue."[43] Also, the addition of slots increased the attraction of gamblers to horse races. For example, wagering of horse races increase 20 percent for the company compared to prior year due to casino slots. [44] Since there is a positive growth in the horse racing industry, wagering on horse racing is a threat of substitute for the casino gambling industry.
V. Competition:
The competition within the casino gambling industry is very intense. There are numerous competitors who have established casinos around the country. The three major competitors within the industry are Las Vegas Sands Corp (LVS), MGM Mirage (MGM), and Wynn casino resort (Wynn).[45] Refer to exhibit 4 below for the breakdown of each company's market share within the industry.
Exhibit 4: The Casino Gambling Industry Market Share
Source: Yahoo Finance
In addition, competition is high since there are many new entrants entering the industry. For example, the number of casinos doubled within the Las Vegas area between the years 1996 and 2000.[46] Also, the increase of Indian tribe casinos and riverboat cruises over the years has escalated the competition within the casino gambling industry. For instance, "by 2002 there were over 100 casinos on Indian reservations across 17 states" and this number continues to increase each year.[47] Also, there are approximately 65 riverboat gambling cruises currently operating within the United States which are very popular.[48] Due to the large amount of companies within the casino gambling industry, competition within the market is viewed as high.
VI. Final Assessment:
After analyzing the industry through the porter fives model, the casino gambling industry is assessed as being moderately attractive. The combination of intense competition and high number of substitutes make it difficult for firms to compete, however, the demand for gambling is high which offsets both forces. Consumers are attracted to the casino gambling industry and are willing to chance large amounts of money in the hope of winning big. Due to the high number of individuals gambling, the casino gambling industry is a 74 billion dollar market and is currently growing.[49] Furthermore, since there is a lot of growth within the industry and there are low barriers of entry, the casino gambling industry is very attractive to new establishments. For a summary of the porter five forces analysis, refer to exhibit 5 below.
Exhibit 5: Porter's Five Forces Analysis
| Porters Forces | Notes | Strength |
| Barriers to Entry | "Government Regulations. However, trend is for states in need of gaming tax revenues to approve everything from Indian, riverboat and regular casinos. Specifically for Sands, competitors are moving into California, Oregon and in its home area of Reno. | Very Low |
| Competition | Many competitors. Established hotel/resort operations have spread from Atlantic City/Las Vegas into many exurban areas around the country. In addition, dozens of Indian casinos have started across the country. Finally, riverboat casinos were the first form of ‘casino’ gambling to emerge as governments legalized such activities. | Very High |
| Substitutes | Casino Gaming can be divided into Non-Indian Hotel/Resort style (full offering of games), Indian Casinos, and Riverboat. Gaming can be further subdivided into horseracing, slots and other limited forms. These are spread across the country. For Sands, there are plentiful substitutes to its Reno-base of operations within a 100 mile radius. | High |
| Buyers | Consumers are flocking to casinos and gaming resorts and riverboats. While they have plenty of choices as to where to gamble and stay, consumers have very little power in terms of bargaining for already low prices. | Medium |
| Suppliers | Several public and private companies supply gaming machines and tables. Hospitality industry is commoditized."1 | Low |
1 Source: The Sands Regent Stock Valuation
Trends
The Gaming industry in the USA has a long history. The first lottery on American soil was held during the 16th century to raise revenue to help develop Jamestown, Virginia etc[50] . Since then, Americans have always been gambling in some form or another. The gaming industry at that time was scattered and were very small in nature. Most forms of gambling and almost all forms of lotteries were outlawed around 1870. The revival of lotteries began in 1964 in New Hampshire, followed by New York and other states after the government became liberal and relaxed the laws for this industry. Gambling industry exist in many different strategic groups. The main strategic groups which have been legalized by the US government are Casinos, Riverboat Casinos, Bingo, Horse Racing, Sports Wagering etc. In 1931, the state of Nevada legalized gambling and that triggered the new era of Casino - Resort type industry in the United States.
Relaxation in Government Regulations
The gambling industry has been heavily controlled by government regulations. Since 16th century, the government has been alternately outlawed, legalized and sponsored different form of gambling. They have proven to be an important source of income in terms of tax, infrastructure development, entertainment and employment for the government. During 2006, US commercial casinos generated $5.2 billion, an increase of 5.5% as compared to 2005. The revenue generated by Casino’s has been increasing every year. Fig T1.1 gives an overview of revenue generated by each state in terms of tax and its growth between 2005 and 2006. This growth lured the government to legalize casinos in places that did not have any industry or any other forms of employment.
Fig T1.1: Commercial Casino tax revenue by state, 2005 vs. 2006.
Other Strategic Groups.
Growth in other strategic groups was not same as casinos. Casinos and Lotteries are the only groups that became famous and organized. The competitive advantage of lottery industry was its low cost structure whereas Casino industry was more glamorous and had the price premium differentiation.
Fig 1.1 shows the growth of different forms of gambling and by 2005 Casino leads the market with commercial casino $31.8 billion revenue industry.
Source: http://www.americangaming.org/Industry/factsheets/statistics_detail.cfv?id=7
Fig 1.1 Comparison of different forms of gambling growth in US in 2005
Riverboat Casinos
Not every state government encouraged casinos as they created more social damage to the community. Investors came up with different ideas and styles of casinos and lobbied government for licenses. Between 1989 and 1993, Legislation in Iowa, Illinois, Louisiana, Missouri and Indiana authorized Riverboat casinos. These casinos were permitted only on boats when they were sailing. The idea behind was to reduce social damages that might accrue from casino gaming in communities. Initially it did not become popular because there was virtually no desire for customers to sail when they were gambling. Mississippi changes its rule to redefine the concept of Riverboat to make it more attractive. They permitted such casinos on boats at dockside and removed the criteria of gambling on boats only when it’s sailing. That prompted to redefine boats and the government become liberal and defined a boat as any structure built over water along permitted waterways. This change in law helped riverboat casinos gain popularity.
Mining Town Casinos
Mega casino complexes exist only in Nevada and Atlantic City as such kind of casinos were never favored by US jurisdiction. But their success gave birth to small forms of casinos called mining town casinos. They were open in Deadwood, South Dakota in 1998 and then in other cities like Central City, Cripple Creek and Blackhawk in 1990. But these casino had several restrictions on number of machines and tables that they can have and location where they can be opened. They could never become very popular.
Indian Casinos
In 1988, Indian Gaming Regulatory Act was passed after which several general forms of Indian casinos were opened. The size, location, permitted games and other significant circumstances are highly dependent on the state in which the tribal lands are located. Foxwoods Casino in Connecticut is the largest and most profitable casino in the world. It holds that status because of a duopoly with another Indian Casino, The Mohegan Sun for casino-style gaming in New England. It has a compact with the state that permits all forms of casino games permitted in Nevada or Atlantic City. Furthermore there were no other legal forms of casino-style gambling in these areas until now.
From Gambling to Gaming and Entertainment industry
During the 1990s, the casino industry transformed its image by referring to itself as the gaming industry. The image of gambling was being redefined during that period and big casinos started mixing gambling with pleasure. Casinos with resorts, night clubs, theaters, shows, theme parks etc changed the image from mere gambling to entertainment industry. They now started focusing on customer base and innovative ideas to attract tourist rather than just gamblers. They started focusing on female customers. Many casinos even started having areas for kids where they can spend time with toys and video games while parents gamble. Gradually Casino gambling was socially accepted by Americans and accounted for 36% of nearly $100 billion entertainment industry[51]. This trend made casinos more popular than other strategic groups of gambling i.e. bingo, horse racing and sports wagering. Mega casino complexes for example The Mirage, Excalibur, Treasure Island, MGM Grand, Luxor, Monte Carlo, and New York New York evolved and changed casino from gambling to entertainment industry.
Latest Trend
The recent trend of casinos which changed itself from gambling to gaming and then entertainment industry is now focusing on tourist and corporate industry. Las Vegas and Atlantic City is no longer seen as mere casino based cities, but as a tourist and vacation destination. In 2007, non-gaming revenue of MGM’s was 61.4% of its total revenue.[52] There are no major developments happening in other strategic groups. Casinos seem to be the most successful group and will continue to be the leader.
Part II: Company Analysis
Company Profile
Company History
MGM Mirage began its operations in 2002, after MGM Grand and The Mirage Resorts merged when Mirage was acquired for $6.4 billion. At the time of the merger, MGM was the largest gambling company in the world. In 2004, MGM Mirage sold two of the Golden Nugget casinos to a private investor firm for approximately $215 million. Later that year MGM Mirage began a bidding process to buy one of its premier competitors, Mandalay Resort Group. In 2004, MGM Mirage sold MGM Grand Darwin for $140 million to Skycity Entertainment Group. In 2005, MGM Mirage agreed to pay $7.9 billion which $2.5 billion was assumed to debt.[53] Through the years MGM Mirage continued to join partnerships and buy or sell parts of their companies.
MGM Mirage is one of the world’s largest leaders in the gaming and hotel industry. They currently own and operate 17 locations on the Las Vegas strip and have established seven joint partnerships with other resorts and casino in Connecticut, New Jersey, Mississippi and Michigan.[54] MGM Mirage’s objective is dedicated to providing quality entertainment, luxurious facilities and exceptional customer service. MGM Mirage and their employees are dedicated to providing alluring blends of entertainment thought out the world.
MGM Mirage operates in one sector, the ownership and operations of casinos resorts. This includes gaming, hotel, dining, entertainment, retail and other amenities. MGM Mirage is committed to providing excellent customer service and a memorable experience to their guests. The technique is used for branding so the guest will return and refer new guest to the MGM Mirage so they maximize profits. The casino is open 24 hours a day every day of the week. The casinos offers an array of slot machines, table games including blackjack, craps, casino war, roulette, electronic gaming such as video poker, slot machines and race and sports areas. They have also established areas for high limit players. MGM Mirage has also been the new home for the professional poker players and popular poker tournaments such as the World Poker Tour.
MGM Mirage offers elite entertainment for their guest such as hosting well known comedian-impressionist-actors and a variety of Cirque De Soleil performances. These performances are usually sold out and require patrons to make reservations prior to attending. These performances are marketed to both casino resort guests and other travelers staying in other resorts. MGM offers a variety of fine dining and premier shopping located in their casino resorts, making it extremely convenient for their guest.
MGM Mirage has a 50% interest in gaming therefore they have implemented the American Gaming Association’s (AGA) Code of Conduct[55]. The purpose is to promote responsible gaming and to help control or eliminate underage gambling. AGA educates the MGM Mirage employees with the responsibility of gaming, policies and procedures. It is a commitment for MGM Mirage to support and provide public awareness on the gambling and alcoholism to their customers.
MGM Mirage currently owns approximately 700 acres of land in the Las Vegas strip. The operating resorts includes; Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, Excalibur, Treasure Island, New York - New York, Monte Carlo, and Circus Cirucs Las Vegas. They own MGM Grand Detroit a hot spot in the downtown area in Detroit. In December 2007 they established a 50/50 partnership with Pansy Ho Chiu-King and opened MGM Grand Macau in Asia. [56] MGM Mirage continues to seek development opportunities in order to grow their operations. In 2007, MGM Mirage’s total revenue was $7.6 billion. Given that MGM has been very successful with their revenue this has allowed them the opportunities to explore new ventures.[57]
Customers
In 2006, the U.S. population had a median household income of $50,222 and the average U.S. casino customer income was $58,079[58]. On average the casino customer had a 16% higher income as compared to the national median income. At the end of 2007, MGM Mirage generated $3.2 million in casino revenue, $2.1 million in room accommodations, $1.6 million in food and beverages, $296,000 in retail, and $560,000 in entertainment. [59] Their customer base is very diverse where not all guests participate in gambling. Therefore, MGM Mirage has to satisfy the need for all guests in entertainment, dining and shopping arena. The median age for a U.S. casino customer is 47 years old compared to the median age of 46 years old. At this age the individual has more disposable income to spend and are likely to be traveling for business.
MGM Mirage has a variety of luxurious resorts, while others are more affordable or family oriented. MGM Mirage markets their luxury suites with complimentary golf privileges to their business travelers and premium gaming customers. The high stake players also receive perks from MGM Mirage such as free upgrades, complimentary golfing, dining and entertainment. On the other hand, Circus Circus Las Vegas is tailored for families because of the amusement park and other activities located in the hotel. This hotel will attract families that are traveling with children. MGM Mirage has implemented the right marketing campaign to satisfy the large array of consumers.
MGM Mirage has leisure customers that travel to Las Vegas as first time visitors or repeat visitors. If the customer stays at MGM Mirage on their first visit they have to persuade and sell them their services. There are many competitors in the area therefore MGM Mirage, has to make their guest stay flawless, so they have a memorable experience. Other customers included are business travelers, couples that are planning their weddings, honeymooners, conventions, and premium gaming customers.
Competitors
MGM Mirage operates in highly a competitive location. They compete with other casino resorts on gaming, hospitality, personal and business travels. Their primary goals in competing successfully include[60]:
▪ Locating their resorts in desirable leisure and business travel markets, and operating at superior sites within those markets;
▪ Constructing and maintaining high-quality resorts and facilities, including luxurious guestrooms along with premier dining, entertainment and retail amenities;
▪ Recruiting, training and retaining well-quantified and motivated employees who provide superior and friendly customer service
▪ Providing unique, “must see” entertainment attractions; and
▪ Developing distinctive and memorable marketing and promotional programs.
MGM Mirage competitors are the other hotels and casinos located in the Las Vegas strip or in the various locations. Depending on the hotel and casino some might be more high quality for the preferred guest and high roller. Restaurants in other locations are their competitors because there prices are lower. MGM Mirage offers premier dining which can have restrictions to the individual that doesn’t want to pay top dollar for their meal. Another competitor is the various types of entertainment that are available. MGM Mirage has to promote and market their attractions to new and returning customers making it a “must see” event.
Current Strategy - Corporate Level Strategy
MGM Mirage is focused on one business unit, the operations of their casino resorts. This operation includes hotel, gaming, dining, entertainment, retail, and other resort amenities. A significant portion of MGM Mirage’s revenue is generated from their high stake players. However, the resort receives half of their revenue from non-gaming activities. Therefore MGM Mirage has to accommodate both types of patrons, gaming and non-gaming.
MGM Mirage owns several premier casino resorts in the world therefore, their goal is to continue to reinvest and retain their competitive advantage in the market. Their strategy is based on developing and maintaining competitive advantages in the following areas:[61]
▪ Develop and maintain a strong portfolio of resorts;
▪ Operate resorts to ensure excellent customer service and maximize revenue and profit;
▪ Execute a sustainable growth strategy; and
▪ Leveraging their brand and management assets.
MGM Mirage utilizes the portfolio approach which allows them to ensure that they are investing and managing resorts in each market segment that is superior to their competitors. Their strategy is to own and invest in superior real estate, develop their assets, partner with other companies and buy and sell real estate. The approach is to have premier resorts in each geographic market and in each segment. MGM Mirage leverages their management expertise with brand recognition in order to explore strategic partnerships and international expansion opportunities[62].
MGM Mirage formed a strategic alliance with the Mashantucket Pequot Tribal Nation (MPTN), owners of Foxwoods Casino Resort (Foxwoods), in Southeast Connecticut. The new resort will be adjacent to Foxwoods and is scheduled to open in May 2008. It will utilize the brand name of MGM Grand at Foxwoods. Foxwoods and MGM Mirage has also formed a jointly owned company, Unity Gaming, LLC, develop future gaming and non-gaming ventures.
MGM Mirage formed a joint venture with Diaoyutai State Guesthouse in Beijing, People’s Republic of China. They plan to develop a luxurious non-gaming hotels and resorts globally in prime locations. They have also formed joint ventures with Jean Properties, which MGM Mirage will master plan and develop a mixed-use of community in Jean, Nevada. Another joint venture was formed Kerzner International and Istithmar to develop a multi-billion dollar resort that will be located in the southwest corner of the Las Vegas strip[63].
MGM Mirage leased ten acres of land in Atlantic City to the Borgata in a long term lease agreement for their current operations and future expansions. MGM Mirage still owned 72 acres of land available for development. In 2007, they announced their development of MGM Grand Atlantic City. This new development will include three towers, approximately 3,000 rooms and suites, a convention center, and wide array of gaming, retail and entertainment.
In order to sustain growth, MGM Mirage has focused on managing their investments in existing resorts, new resorts or initiatives, repaying their long term debt and returning capital to their shareholders.[64] They invest in markets that provide excess opportunities in capital such as gaming and non-gaming markets. Although the gaming industry has generated a significant amount of revenue, they don’t want to lose sight of the non-gaming industries because it is complimentary to their core business. MGM Mirage focuses on non-gaming patrons by providing them with exceptional customer service. They offer them the finest entertainment, hotel accommodations, restaurants, premier retail stores and resort amenities such as golf courses, night clubs, spas and recreations for children.
In November 2007, MGM Mirage announced their plans to develop with MGM Grand Abu Dhabi. The resort will be located in the prominent downtown waterfront area in Abu Dhabi Island. MGM Mirage will solely be the developers of the project and manage the development for a fee. MGM Grand hotel, two additional MGM branded luxury hotels and a luxurious residential property will consume 50 acres of land. These resorts will be non gaming resorts but will offer “must see” entertainment, world-class dining, high end retail shops, and convention facilities.[65]
MGM Mirage has expanded their market to ensure they have captured the audience for all age types. The younger audience can take advantage of the exclusive array of night clubs and bars in MGM locations. They also have dining options that are less costly than the fine restaurants, entertainment, and affordable retails stores they can visit. Depending on the patrons age MGM has a variety of resorts that suites their age. The mature audience can enjoy the fine dining, “must see” entertainment, premier retails, and take advantage of the golf courses.
MGM Mirage has implemented the generic strategy of the broad-based differentiation. Their product differentiation is high due to their uniqueness in their casino resorts.[66] MGM Mirage’s casino resorts offer an extensive amount of services such as “must see” entertainment, world-class dining, high end retail shops and convention facilities in addition to their casinos and hotel accommodations. They have 70,000 employees that are committed to providing an unsurpassed experience for everyone one of their guests.[67] Their market segmentation is high and they participate in many market segments. They also have a distinctive competency in their research and development, sales and marketing.
MGM Mirage advertises on the radio, television, billboards, newspapers, magazines in selected cities throughout the United States. They also advertise through their regional marketing offices in United States and in foreign cities. Marketing spends a lot of time contacting the high limit players directly.[68] They also use the internet websites allowing customers to make reservations for the resorts, golf courses and dinner.
Their marketing strategy is very diverse to attract all types of individuals.
Strategic Groups
Situational Analysis
To examine the company's situation, the SWOT analysis can be applied to determine the existence of any external opportunities or threats for MGM Mirage. Furthermore, analyzing the SWOT framework will identify internal strengths or weaknesses that MGM Mirage should address. By identifying the company's position, strategies can be identified that will enhance MGM Mirage's competitive advantage within the industry. Below is an analysis of MGM Mirage's internal strengths and weaknesses as well as the external opportunities and threats of the company. This analysis will identify potential strategies for MGM Mirage.
Internal Situation Analysis
I. Strengths
Profitability: In 2006, MGM had net income of approximately $648M. As of December 31, 2007, the company doubled their 2006 earnings and had net income of $1.58 billion. The significant increase compare to prior year illustrates the company is effectively marketing to their target consumer base and successfully fulfilling their customer's basic needs. Furthermore, the considerable increase, of approximately $936M, from 2006 vs. 2007 demonstrates the company is effectively keeping operating expenses down while increasing their revenue. [69]
Substantial Growth: The Company is currently focused on developing opportunities to expand in the domestic and international market. Potential developing opportunities consist of investing in new casino hotels, expanding on existing casino hotels or acquiring competitor's casinos. Current projects to continue the growth of MGM is CityCenter, MGM Grand Atlantic City Casino resort, Macau and Kerner/Istithmar Joint Venture. [70]
CityCenter: MGM Mirage, along with their joint venture partner, a Dubai, is currently developing a new casino called CityCenter, which will be located in Las Vegas. This project is expected to be finished by the end of 2009. Each joint venture partner owns 50 percent of the new luxurious casino hotel that will have approximately 4,000 rooms, 2,700 luxury condominiums, retail shops, various restaurants, etc. [71]
MGM Grand Atlantic City: The MGM Grand Atlantic City project is estimated to open in 2012 and cost approximately $4.5 billion dollars. [72] Construction for this project will begin in the first quarter of 2009. There will be three separate hotel buildings for a total of "3,000 rooms and suites, 5,000 slot machines, 200 table games, and a poker room. Also, there will be restaurants, nightclubs and entertainment, a spa, a 500,000-square-foot retail area, and a convention center."[73]
Macau: The glamorous casino hotel opened on December 18, 2007 in Macau, China. The project was estimated to cost $1.25 billion which is owned equally by MGM Mirage and Pansy Ho Chiu King. [74] "The property includes 600 rooms, suites, and villas, as well as a casino with 300 table games and 1,000 slot machines, several restaurants, and entertainment facilities." [75] Currently, there are expansion plans to the second floor of the casino that will add approximately 72 square feet of casino tables and other gambling activities.[76]
Kerner/Istithmar: This multi-billion dollar resort is to be located in the north end of Las Vegas and is targeted to be open in 2012.[77] MGM Mirage entered into an agreement with Kerner International and Istithmar forming a joint venture with MGM Mirage owning 50% of the resort. [78]
Resort Portfolio: MGM Mirage's resort portfolio consist of versatile casino resorts within various market segments in which the company owns, invests in and manages. Their portfolio consists of (1) selling and buying real estate assets, (2) owning resorts or partnering with other companies and (3) investing in existing casino resorts. Due to their investment diversity, their resort portfolio is viewed as superior when compared to their competitors. Furthermore, MGM Mirage is always looking to enhance their resort portfolio by focusing on a growth strategy. [79]
Brand Name: MGM Mirage has a strong brand reputation and is a well respected casino resort. The company is known for its elegant and intricate casino chains and has received numerous recognition awards related to the operation of their casinos. In addition, MGM Mirage is one of the leaders in the casino gambling industry and operates 20 casino resorts as of December 31, 2007. [80]
Investors view MGM as favorable stock option: Recent reports have been issued by investment banks and firms about MGM's favorable stock option. Firms like Jefferies & Company, Inc, a global investment bank and securities firm, issued a report stating they "continue to favor shares of MGM and believe the company offers excellent value to
shareholders." [81] Furthermore, Jefferies & Company are explaining to stockholders that since MGM is a well diversified company with much growth opportunities, they "believe it is a must have security for any portfolio." [82] These positive opinions by well known investment firms provides as a strength for the company.
Diversity Initiative Program: MGM Mirage has received several awards and recognition for its Diversity Initiative program. In 2000, the company began this program and established diversity among their work force. This concept has been implemented into their business strategy with the idea diversity is crucial to the company's success. A diversity workforce is an advantage to MGM Mirage since providing excellent service to their customers is one of the company's goals. Due to MGM Mirage's diversity within their workforce, the company is able to better serve their broad base customers more effectively. Superior customer service will positively increase the company's revenue due to repeat business and as a result is a strength of MGM Mirage.[83]
II. Weaknesses:
Significant amount of debt: As of December 31, 2007, MGM Mirage is approximately $11.2 billion in debt. MGM's long term debt provides the company at a competitive advantage since their "indebtedness could increase [the company's] vulnerability to economic and industry conditions."[84] Since most of their debt has variable interest rates, which fluctuate based on how the market is performing, the company's interest expense can potential increase due to the recent decline of the market. Furthermore, the company's ability to reduce their debt is depended on factors that are not in their control such as future cash flows and other capital contributions. The significant indebtedness is a weakness for the company as well as the lack of control the company has of reducing their outstanding debt. [85]
Limited Geographic Diversification in Resort Portfolio: The majority of MGM Mirage's key resort casinos are located in Las Vegas. The company's portfolio should contain major resort casinos within different geographic markets and not concentrated on one main location. In addition, MGM Mirage's main rivals are competing within different geographic gambling markets which are a disadvantage to the company. MGM Mirage should focus on expanding into other geographic locations, including international markets, in order to build their resort portfolio and to close this weakness in their portfolio. [86]
Location of Competitors Gambling Facilities: There are a number of MGM Mirage's customers who are located closer to other gambling facilities than resort casinos owned by MGM Mirage. The lack of diversification in location of MGM Mirage's casinos is a disadvantage to the company since they are losing potential revenue to competitors who are located closer to where MCM Mirage's potential consumers live. Currently, MGM Mirage owns ten casinos located in Las Vegas, four casinos in Nevada and six casinos located either in Mississippi, New Jersey, Michigan, Illinois and Macau. To address this weakness, MGM Mirage should concentrate on developing future casinos located across the country closer to where their customers reside. [87]
Casinos under Construction: Many of MGM Mirage's casinos located in Las Vegas are currently under construction. The company could experience a loss of revenue due to these development improvements on existing casinos. The extent of the company's future operating losses is difficult to determine since the increase of competition is hard to predict. [88]
Internal Competition: To an extent, there is internal competition within hotel casinos owed by MGM Mirage. For instance, the "Bellagio, MGM Grand Las Vegas, Mandalay Bay and The Mirage, in particular, compete for some of the same premium gaming customers. MGM Grand Las Vegas and Mandalay Bay also compete to some extent against each other in the large-scale conference and convention business." [89]
External Situation Analysis
III. Opportunities
Consolidation: On March 6th 2000, MGM Grand, Inc acquired Mirage Resorts, Incorporated for $6.4 billion. It was the largest acquisition in gaming industry and there were more to come as MGM started stretching its muscles in terms of consolidation. Since then they have acquired many major hotels and resorts in Las Vegas for example New York, New York, Treasure Island, and Bellagio etc. They also started vertically integrating the entertainment business in Las Vegas and entered into theme park, shopping complex, theatres, and retail shops and recently into real estate business. By vertically integrating the value chain, they have targeted diverse customers from gamblers to tourist, vacationers and professionals for seminars and other major events. People now visit Las Vegas not just to gamble, but for a diverse experience.
2000 - MGM Grand buys Mirage Resorts for $6.4 billion.
2005 - MGM Mirage buys Mandalay Resort Group for $7.9 billion.[90]
Diversification: As part of their diversification strategy, MGM has entered into real estate and hospitality industry. City Center in Las Vegas and Abu Dhabi project “MGM Grand Abu Dhabi hotel” are few examples. They are also eying China which has a huge demand of hotels in near future. As part of their real estate diversification, they are planning to develop the undeveloped and underdeveloped land in the US, mainly in Las Vegas and Atlantic City. MGM is rapidly moving towards becoming the holding company consisting of MGM Casinos, MGM Hospitality and MGM Real Estate[91].
Expansion: Macau is the fastest growing gaming market in the world, with gaming revenue compounding at 23% annually since 2001[92]. MGM is one of only 6 companies licensed to operate in Macau. Regulations in international market have been changing as they open their economy and door to international market. MGM with its reputation and brand image has the potential to target to such developing market. There are other untapped markets like Malaysia and Singapore which could become the potential target for MGM.
Tourism: MGM depends on the substantial growth of tourism, be it Las Vegas, Atlantic City or Macau. Based on historical information, tourism in Las Vegas has been increasing 5% every year[93]. Atlantic City has recently started focusing on attracting more tourists and changing its image similar to Las Vegas. Macau has already become a tourist destination and China’s government is doing everything to attract tourists.
Demographics: Gaming industry tends to have customers who take home middle or high levels of income. The average household income of casino gamblers is $51,000. The average household income in US is around $42,000 as shown in fig 1.1. As the income of an individual rises, so does the likelihood of he or she is a casino gambler. According to a recent study, the typical casino player is middle-aged and more likely to be female. The average age of casino gambler is 47 and it peaks between the ages of 51-57. These data seems to be favorable for MGM as the US population is aging. MGM has recently started focusing to their female customers and their needs. Many casinos have separate area for children’s below 18 ages so that women can spend their time in casinos.
IV. Threats:
Competition: MGM Mirage does not limit their competitors to a particular geographical region since their customers have the option to gamble at casinos all over the world. Recently, new entrants have been opening casinos and expanding their operations in the Las Vegas area as well as areas outside of Las Vegas. Furthermore, the expansion of Native American casinos has also been flourishing. "According to the California
Gambling Control Commission, more than 60 compacts with tribes had been approved by the federal government as of December 31, 2007, with more than 50 of the tribes legally operating casinos in California in accordance with these compacts."[94] The increase of casinos operated by tribes as well as new competitors is a potential threat to MGM Mirage. [95]
Oil price: Since the price of oil increased considerably over the year, customers may have decreased the number of visits to MGM Mirage's casino. Furthermore, the increase of oil prices could have prevented potential consumers who would have traveled the extra distance instead of gambling at a local casino or online casinos. By consumers decreasing the number of visits to MGM casino because of the increase in gas cost, ultimately reduces the potential profit and revenue MGM could have earned. [96]
Ownership: As of December 31, 2007, Tracinda Corporation owns 52% of MGM Mirage's common stock. This is a potential threat to the company since Tracinda has the "ability to elect [the company's] entire Board of Directors and determine the outcome of other matters submitted to [their] stockholders, such as the approval of significant transactions." [97] By Tracinda owning more than 50 percent of the company, MGM loses the control of influencing important decisions as well as the final decision. [98]
Litigation Claims: Legal claims have been brought against MGM Mirage and their subsidiaries. As a potential threat, the result and outcome of these litigation claims, can negatively affect MGM Mirage's cash flows and ultimately their operation. The legal proceeding against MGM Mirage, relates to a non compliance with the Fair and Accurate Credit Transaction Act (FACTA). The claim against MGM Mirage argues the company included more than 5 digits of the customer credit/debit card or included the expiration date on the customer receipt at the point of sale. As of January 1, 2005, Merchants had to immediately comply with this act, but MGM Mirage is accused of failing to comply in a timely manner. "Although the complaint does not assert that [MGM Mirage] sustained any actual damage, the plaintiff seeks on behalf of herself and all similarly situated putative class members throughout the United States statutory damages of $100 (minimum) to $1,000 (maximum) for each transaction violation, attorneys’ fees, costs, punitive damages and a permanent injunction." [99] Based on how many of the company's transactions were non compliant with FACTA, depends on how much MGM Mirage will pay in punitive damages. As a result of what the outcome could be, the litigation is a potential threat to MGM Mirage.
Electricity and other energy costs: A large cost associated with casino operations is electricity and energy expenditures. Recently, due to the market performance and other economic effects, the cost of energy increased dramatically over the year. Since MGM Mirage is a large consumer of these operating costs, the company's weakness is the large amount of electricity and energy expenses they incur to effectively operate their business.[100]
Economy: With the growth of country’s economy the purchasing power of consumer increases and the likelihood of them spending money in casinos also increases. There is direct relationship between economy and revenue generated by gaming industry. If the economy grows, gaming industry makes profit and vice-versa. Past few years has been good for MGM as the US economy has shown healthy growth. But the current and near future scenario for gaming industry seems to be challenging as the US economy might face slowdown and most of MGM’s investment is in the US market. But the analyst has hopes that MGM will get a boost from recently opened casinos in Detroit and China's gambling haven Macau, and other higher-end casinos like Bellagio might benefit from international visitors taking advantage of the weak dollar[101].
Online Casinos: Technology has and always been an intricate part of gaming industry and will continue to be the same. It has helped change the technology used in slot machines to placing the slot machines near discounted hotel room where customers are more inclined towards gambling. Till now technology has been seen as an opportunity to increase revenue, but now it has become the biggest threat with the introduction of Internet gambling or online gambling.
The introduction of internet gambling has proved to be a threat to MGM and other gaming industry. Earlier users use to gain experience the hard way by loosing real money in casinos. Now they can practice and understand by playing for free on internet and then visiting casinos when they have some confidence in gambling. Also the internet gamblers have stopped going to casinos to gamble when they can do the same through internet. The revenue that casinos use to generate from other recreational units like food and beverage, lodging etc would be loosing money. The online gambling industry revenues in 1997 were $1 billion, with $600 million from the U.S. alone. The revenues tripled by 2001 with more than $3 billion worldwide, almost tripled again by 2004 with $8.2 billion and reached more than $15 billion in revenues so far in 2006.[102] The increase in revenue for internet gambling is also seen as a opportunity cost for MGM as the potential customers are being lured to internet gambling where which is easily accessible with much less hassle of traveling, lodging and food. MGM also entered online gambling in 2003, to develop and offshore online casino in Isle of Man. But due to political reason, they took a loss of 5 million and closed the project.
Government Regulations: Gaming industry has been heavily regulated by government regulations. The Government has thrived on gaming industry because of the growth in revenue and infrastructure. In 2006, gaming companies in the 11 states that have 445 commercial casinos generated taxable income of $4.74 billion dollars. It directly employs almost 375,000 people with an average yearly wage of $26,000, while employing an additional 500,000 people indirectly. But it also brings negative externalities like greater law enforcements, more frequent street cleaning, social services needed when gambling leads to the break-up of families due to addition or loss due to gambling. Due to these reason’s, the government has done study and analysis on gambling industry and its effect on social life and culture. The regulation in this industry has been changing to cater to better life for common people.
Conclusion
MGM Mirage's key issues are
· Expansion
· Diversification
· Maintain the leadership Position
· Online Gambling
Expansion: Since their resort portfolio consists of all but one location within the United States, MGM Mirage is seeking opportunities to expand internationally. Currently, growth opportunities for the company exist in countries such as Asia since the market is expected to expand. Furthermore, MGM Mirage is currently enhancing their resort portfolio by investing in non gambling resorts. By expanding the company's operation into different market locations and into non gambling resorts, MGM Mirage will be able to gain competitive advantage over their competitors. This is important since there is a substantial increase of Indian tribe casinos as well as commercial casinos.
Diversification: MGM has been into casino industry for long and they have become the leader in this industry. It’s time for them to diversify there portfolio and enter into new market. Being only in casino industry is dangerous for the company. A small change in regulation or natural disaster in Las Vegas could have a major negative impact on company’s earnings. Their current strategy of expansion into real estate and hospitality industry is one such step to diversify their product.
Maintain the leadership position: From the company's situational analysis it is clear that MGM Mirage's core competency is their luxury brand image. Due to their superior reputation and excellent quality of service, the casino resort is one of the top preferences for gamblers. In addition, because of MGM Mirage's strong brand image, investors view the company's stock as favorable since MGM is a well diversified company with much growth opportunities. Since the company has strong brand recognition and is viewed favorably by investors, it contributed to the fact that MGM Mirage is one of the major leaders within the casino gambling industry.
Online Gambling: Online Casinos has been growing rapidly both in US and abroad. MGM made every attempt to enter into this market. But uncertainty in the US government regulations caused them to shut down their project in 2003. Online gambling is seen as an opportunity loss of MGM as gamblers can gamble from their home. The only difference is the surrounding environment created by land based casinos. It’s more glamorous and fun filled. Though the older generations are not very tech savvy, they hesitate to use their credit card on internet for gambling. But the new generations are more addicted to internet. Future of land based casinos would be accompanied by gamblers who need more than just gambling, like environment, and other entertainments or vacations.
Even though MGM Mirage is a strong leader within the casino gambling industry, the company can encounter constraints when there are week economic and market conditions. For instance, if poor economic conditions exist, it can negatively affect MGM Mirage's profitability since consumers save more and spend less in an economic slowdown. Furthermore, gas prices as well as other consumer expense increase during poor economic conditions which further reduce the amount a consumer has available for spending. These restrictions on consumer spending are a constraint to the company. Also, poor economic conditions result in greater operating expenses; such has oil, electricity and other energy costs. Since casinos have a large amount of operating expenditures, week economic conditions can pose a threat to the industry due to the increase of cost in operating expenses.
MGM as a group has grown more than just a casino company. Even though it’s major investment is related to casinos and its surrounding industry, but recently they are focusing on other industries like real estate and hospitality, both locally and internationally. They are new to these market and industry. It’s hard to predict how the new location would turn out to be for MGM. It won’t be exaggerating to say that they have already established a brand image and entering into any new industry and new geographic location is not difficult for them. Their reputation precedes them wherever they go. They should continue focusing on their core competency – their brand image.
MGM Mirage Analysis
After employing a SWOT analysis to examine MGM Mirage's business situation, key issues for the company include the need to expand into the international market. Since their resort portfolio consists of all but one location within the United States, MGM Mirage is seeking opportunities to expand internationally. Currently, growth opportunities for the company exist in countries such as Asia since the market is expected to expand. Furthermore, MGM Mirage is currently enhancing their resort portfolio by investing in non gambling resorts. By expanding the company's operation into different market locations and into non gambling resorts, MGM Mirage will be able to gain competitive advantage over their competitors. This is important since there is a substantial increase of Indian tribe casinos as well as commercial casinos.
From the company's situational analysis it is clear that MGM Mirage's core competency is their luxury brand image. Due to their superior reputation and excellent quality of service, the casino resort is one of the top preferences for gamblers. In addition, because of MGM Mirage's strong brand image, investors view the company's stock as favorable since MGM is a well diversified company with much growth opportunities. Since the company has strong brand recognition and is viewed favorably by investors, it contributed to the fact that MGM Mirage is one of the major leaders within the casino gambling industry.
Even though MGM Mirage is a strong leader within the casino gambling industry, the company can encounter constraints when there are weak economic and market conditions. For instance, if poor economic conditions exist, it can negatively affect MGM Mirage's profitability since consumers save more and spend less in an economic slowdown. Furthermore, gas prices as well as other consumer expense increase during poor economic conditions which further reduce the amount a consumer has available for spending. These restrictions on consumer spending are a constraint to the company. Also, poor economic conditions result in greater operating expenses; such has oil, electricity and other energy costs. Since casinos have a large amount of operating expenditures, weak economic conditions can pose a threat to the industry due to the increase of cost in operating expenses.
Critique of current strategy:
MGM's Current Strategy
To maintain MGM Mirage's competitive advantage, one of the company's current strategies is to develop and improve their resort portfolio. Currently, MGM Mirage is focusing on developing opportunities to expand internationally and within the United States. The locations of these projects are in Las Vegas (CityCenter & Kerner/Istithmar), Atlantic City (MGM Grand Atlantic City) and Macau China (Macau).
Recommendation
A weakness in MGM Mirage's current strategy is the company's limited geographic diversification in their resort portfolio. The majority of MGM Mirage's casinos are located in Las Vegas. Since most of their resort casinos are concentrated on one main location, MGM Mirage should focus on expanding into other geographic locations besides Las Vegas. Also, since MGM Mirage already has a casino, Borgata, located in Atlantic City, a new development location for MGM Grand Atlantic City would be advised as well. By diversifying the location of future casinos, MGM Mirage will build a stronger resort portfolio by addressing their limited geographic diversification of their casino resorts. Furthermore, by expanding into other geographic locations, it addresses the issue of MGM Mirage's customers who are located closer to other gambling facilities.
Currently, MGM has casinos operating in the following locations; Nevada (14 casinos), Mississippi (2 casinos), New Jersey (1 casino), Michigan (1 casino), and Illinois (1 casino). Since CityCenter is currently being built in Las Vegas, it would not be sensible to halt production and move the project elsewhere. A more reasonable suggestion is to move the location of Kerzner/Istithmar or MGM Grand Atlantic City, since both projects have not began yet, from Las Vegas or Atlantic City to South Dakota. By moving the location to South Dakota, MGM Mirage can target the North Dakota, Montana, Nebraska, Wyoming, Iowa, Minnesota segment markets which in the company currently does not compete. As seen in exhibit 1 below, there are many tribal and commercial casinos within this area.
Exhibit 1: Casino Locations within the United States
Source: CHP in the Hotel and Casino Market Sectors
Therefore, MGM Mirage can enter this market, not previously targeted by the company, and increase their diversity within their resort portfolio and ultimately the company's profitability. Gross revenues within this sector of the gambling industry are significant. For instance, within the South Dakota and Iowa markets, the industry generated approximately $70 and $1,024 million dollars, respectively. Since this is a billion dollar market segment, MGM Mirage should enter the South Dakota market in order to capture a percentage of this billion dollar revenue. Please refer to Exhibit 2 below for further details of the gambling facilities and revenues earned by each state.
Exhibit 2: Commercial Gambling Facilities and Revenues by State
| State | Employee Wages $millions | Gross Revenue $millions | Tax Revenue $millions | Year of first Operation | Type of Casino Land Race- Track River - boat |
|
| Nevada | $6,954 | $9,625 | $777 | 1931 | 256 |
|
| New Jersey | $1,239 | $4,490 | $415 | 1978 | 12 |
|
| Mississippi | $1,028 | $2,700 | $325 | 1992 | 29 |
|
| Indiana | $590 | $2,229 | $703 | 1995 | 10 |
|
| Louisiana | $453 | $2,017 | $449 | 1993 | 1 3 14 |
|
| Illinois | $377 | $1,709 | $720 | 1991 | 9 |
|
| Missouri | $310 | $1,330 | $369 | 1994 | 11 |
|
| Michigan | $368 | $1,130 | $250 | 1999 | 3 |
|
| Iowa | $279 | $1,024 | $210 | 1991 | 3 10 |
|
| Colorado | $207 | $609 | $96 | 1991 | 44 |
|
| S. |
| |||||
| Dakota | $35 | $70 | $11 | 1989 | 38 |
|
| Total | $11,839 | $26,934 | $4,323 | | 354 6 83 | |
Source: CHP in the Hotel and Casino Market Sectors
Not only should MGM Mirage concentrate on moving the location of Kerzner/Istithmar and MGM Grand Atlantic City but also continue to expand their operations within the international market. Currently MGM Mirage only has one casino, Macau, located outside of the United States. Therefore, a sensible suggestion is for MGM Mirage to also move either one of their Kerzner/Istithmar or MGM Grand Atlantic City projects to a location within the international market. Since there are many growth opportunities within Asia, a recommendation for a new area to concentrate on developing a casino resort in that location. For instance, "consulting firm PricewaterhouseCoopers predicts that revenue from casinos and other regulated gambling activities in Asia will grow 14% a year from 2005 to 2010 — the fastest pace in the world."[103] Since MGM Mirage already has a casino resort in Macau, a city where there is substantial growth, a suggestion would be to build a casino in South Korea. Due to "the liberalization of casino gaming in South Korea [is believed by analysts to] drive new growth in the market."[104]
Implementation
To implement the above recommendations into MGM Mirage's current strategy, the first step is to obtain a casino license in both South Dakota and South Korea. This is important since the company cannot begin its operations without the government's consent. Once the government approves each location and supplies MGM Mirage with a casino license, the company must determine a prime location within South Dakota and South Korea that can be appropriately staffed and managed. Once this is complete, to save the company time and money, MGM Mirage can utilize the construction plans from the Kerzner/Istithmar and MGM Grand Atlantic City projects to the new casinos opening in South Dakota and South Korea. The development of both projects will have an estimation of opening in 2012, similar to what the company originally estimated with the Kerzner/Istithmar and MGM Grand Atlantic City projects
It is important for both casino operations to grow significantly and to be successful in the first few years of opening. In order to ensure success, extra care and time needs to be dedicated to the operations and management of these casino resorts. This includes overall management, building maintenance, grounds maintenance, promotions and advertising, hiring highly trained and experienced staff and employing excellent customer service.
To ensure excellent customer service and process efficiency, MGM Mirage should utilize current employees to manage the new casino resorts. Since existing employees are already trained in the company's policies and procedures, it will reduce process errors as well as increase the efficiency of the training process with new employees. Also, to ensure optimal customer service, emphasis should also be place on maintaining the new casino resort in order to uphold their strong brand image.
In order to promote and market each new casino resort, MGM Mirage should target consumers by broadcasting television advertisements, using MGM Mirage's strong brand identity, with the concept of each new casino resort displaying the same MGM Mirage high standards of quality and service. Also, an advertisement in the newspaper can be utilized to target local consumers by providing a brief description of the new casino resort and the benefits, such as providing optimal service and insuring the entertainment value provided by the casino resort is extraordinary. Another marketing tool the company should utilize is to display a brochure at local travel agencies and rest areas informing travelers of the company's new casino resort.
The implementation of these recommendations into MGM Mirage's current strategy will enhance the diversity of their resort portfolio. Furthermore, it will provide MGM Mirage with new market segments to target which has significant gross revenues available for the company to partaken. Ultimately, the company will increase their profitability by diversifying their portfolio and entering into new markets.
*Critique Current Strategy
MGM Mirage has established a customer base by their non-gaming activities. Their customers’ expect the highest quality service, state of the art entertainment and the finest retail shops. MGM Mirage generated approximately $5.1 million in 2007 for non-casino revenue which included hotel rooms, food, beverages, retail stores and other activities. [105] The non-gaming sector is crucial for MGM Mirage to remain competitive in the market. MGM Mirage’s rooms and entertainment prices are higher than their competitors therefore they need to leverage their brand and manage their assets to remain successful in the industry.
Facilitation of new non-gaming resorts is very important to MGM Mirage. The new non-gaming resorts may require a different skill set than the ordinary. Many of the new resorts may not be managed by existing management or personnel with the prerequisite expertise. When MGM Mirage utilizes management that does not have the right expertise it will not compete effectively in the market. MGM Mirage should hire personnel with the right skill sets in order to remain competitive in the new resort. In order for MGM Mirage to be successful in the new market they have to have the right management team leading their employees.
MGM Mirage can analyze other resorts in the area to identify their management structure and their profitability. This would help identify any gaps in MGM Mirage’s management team. Another way to improve their skill set is to cross train management. If MGM Mirage has a successful manager in another location with specific skill set they can bring them into the new resort to train the lesser skill set manager. This will assure management is receiving the proper training and guidance to run the resort successfully. If no expertise exists within the MGM Mirage’s management team then they can hire a native management team or consultant firm to help ensure success in the area. They can work closely with the manager to ensure their skill sets are up to par. This native management team or consultant firm will understand the market in that area.
Once the management team has attained the proper skill set they should implement employee training. MGM Mirage has to assure that their employees have the proper skill sets to complete their responsibilities. MGM Mirage’s brand image is quality so their employees are the front line employees in which the customers interact on a constant basis. MGM Mirage has to provide superb customer experience in order to attract that repeat business and new customers. The management teams and employees have to be in sync with the goal of the organization. This is a critical to the success of the new resort.
MGM Mirage has to continue to evaluate their overall appearance to the non-gaming resorts in order to continue to leverage their brand name of quality. MGM Mirage is growing rapidly however there are many competitors trying to attract the non-gaming customers. MGM Mirage has to continue staying competitive by investing in additional non-gaming amenities such as upgrades to the hotel rooms and suites, pool area, night clubs, entertainment and restaurants. The goal of these investments is to enhance visitor volume at MGM Mirage. They have created a great brand name for their resorts therefore they need to maintain their status.
MGM Mirage currently has an effective way of marketing to their gaming resorts. They spend a lot of time contacting the high limit players however how they can attract existing and new customers to the non-gaming resorts. MGM Mirage has to continue to advertise on the radio, television, billboards, newspapers, magazines in United States and internationally. For the non-gaming resorts MGM Mirage should focus on the high quality shows and entertainment in order to attract the customer. They also use the hotel amenities such as golf courses, day spas, restaurants, premier shopping.
MGM Mirage encounters risk when they explore opportunities outside the United States. These risks can be financial and/or political. The financial risks are foreign currency and adverse tax. The political risks are foreign government regulations, political and economic instability, neighboring countries and trade relationships.[106] MGM Mirage can limit their exposure by employing a native management team to the geographical location that is familiar with the countries financial and political environments. By having this domestic management team it may allow MGM Mirage to operate with greater ease in that country.
Critique current strategy:
MGM's Current Strategy
One of the key issues for MGM is its product portfolio. Majority of the company’s investment is in casino and they do not have any strategy to expand their product portfolio.
Recommendation
MGM seems to be very hesitant in diversifying their product portfolio. They are entering into real estate and hospitality industry and have few projects in pipeline, but none of their current strategy talks about product diversification. They should form three strategic groups MGM Casino, MGM Hospitality and MGM Real Estate to take care of Casino, Hospitality and Real Estate separately. MGM Mirage should become the parent company.
[1] 2007 AGA survey of Casino Entertainment
[2] The Casino Gaming Industry. http://www.jobmonkey.com/casino/html/gaming_industry.html
[3] History of Casinos. http://www.casinoroom.com/history/
[4] Sharpers and Cheaters. http://www.jobmonkey.com/casino/html/sharpers_and_cheaters.html
[5] History of Las Vegas. http://www.lvol.com/lvoleg/hist/lvhist.html
[6] National Opinion Research Center, Gambling Impact and Behavior Study, Report to the NGISC, April 1, 1999, p. 70
[7] Hill, Charles W.L. and Gareth R. Jones. 'Strategic Management Theory'. Houghton Mifflin Company. 2008. pg 57.
[8] Turcinov, Jakob and Christian Borgstrom. 'Towards an emerging global gaming-market'. Mid Sweden University. 2005.
[9] Cochran, John. December 20, 2006.
[10] Commonwealth of Pennsylvania Gaming Control Board. 2006. Pg. 42.
[11] Hashimoto, Kathryn. 'Casino Management: A strategic approach'. Pearson Education, Inc. New Jersey. 2008. pg. 101.
[12] Ibid. Footnote 4. pg 102.
[13] Estes, Andrea. 'Local Voters would rule on Casino Idea'. The Boston Globe. October 4, 2007.
[14] Casino Control Commission. Chapter 41 Applications. State of New Jersey. Subchapter 9. Fees.
[15] Dustion, Roger. 'Regulation of Gambling' January 1997.
[16] Ibid. Footnote 7.
[17] Franklin, Cathy. 'Virtual Las Vegas: Regulate or Prohibit.' Duke Law & Technology Review. June 20, 2001.
[18] Goldstein, Scott and Njbiz Trenton Bureau. 'Startup Casino Company bets on Atlantic City.' Casino Association New Jersey. 2007.
[19] Ibid. Footnote 4. pg. 121, 122
[20] Ibid. Footnote 4. pg. 125.
[21] Ibid. Footnote 4. pg. 127
[22] Ibid. Footnote 4. pg. 128
[23] Ibid. Footnote 4. pg. 125.
[24] Energy and Environment Analysis, Inc. 'CHP in the Hotel and Casino Market Sectors'. December 2005. pg. 14 < http://www.epa.gov/CHP/documents/hotel_casino_analysis.pdf>
[25] Ibid. Footnote 18. pg 15.
[26] Ibid. Footnote 1. pg 53.
[27] 'Casino Vendors'. 1997-2007 Casino City.
[28] 'The Blue Chips.' University of Chicago. April 23, 2005. <http://www.chicagobluechips.com/Uploads/International%20Gaming%20Technologies.pdf>
[29] Yures, Edward M. 'Gambling on the internet: the states risk playing economic roulette as the internet gambling industry spins onward.' Rutgers Computer & Technology Law Journal. 2002.
[30] Wikipedia.
[31] 'Temptation at your doorstep: Internet Gambling.'
[32] Walker, Terri C. 'The Online Gambling Market Research Handbook'. Research and Markets. Jan 2003.
[33] Connecticut lottery <http://www.ctlottery.org/scratchoffs.htm>
[34] Wangsness, Lisa. 'Mass. State Lottery expands availability of Keno' The Boston Globe. March 18, 2008.
[35] Casino Cruise.
[36] Ibid. Footnote 26.
[37] Roger Dunstan. Gambling in the United States. January 1997.
[38] Ibid. Footnote 28.
[39] Ibid. Footnote 28.
[40] Indian Casinos
[41] Ibid. Footnote 28.
[42] Ibid. Footnote 28.
[43] Lawley, Erin. 'Slots boosting Pennsylvania horse racing industry.' Pittsburgh Business Times. February 26, 2008.
[44] Ibid. Footnote 34.
[45] Yahoo Finance. Industry Center - Resorts & Casinos.
[46] Grant, Robert. 'Industry Analysis: The fundamentals.' Blackwell Publishing. May 2007. pg 86.
[47] Ibid. Footnote 38. pg 86.
[48] Ibid. Footnote 9.
[49] Ibid. Footnote 39.
[50] http://www.basisonline.org/2004/08/the-wager-vol-1.html
[53] http://en.wikipedia.org/wiki/MGM_Mirage.
[55] http://en.wikipedia.org/wiki/MGM_Mirage
[56] http://en.wikipedia.org/wiki/MGM_Mirage.
[57] MGM Mirage Annual Report, 10k, Feburary 29, 2008. p43.
[58] 2007 State of the States: The AGA Survey of Casino Entertainment, p36.
[59] MGM Mirage Annual Report, 10k, Feburary 29, 2008. p2.
[60] MGM Mirage annual report, 10k. February 29, 2008. pg 3.
[61] MGM Mirage annual report, 10k. February 29, 2008. pg 1.
[62] MGM Mirage annual report, 10k. February 29, 2008. pg 7.
[63] MGM Mirage Annual Report, 10k, Feburary 29, 2008. pg. 6.
[64] MGM Mirage Annual Report, 10k, Feburary 29, 2008. pg. 6.
[65] MGM Mirage Annual Report, 10k, Feburary 29, 2008. pg. 7.
[66] Yellow book Product/Market/Distinctive-Competency Choices and GENERIC Competitive Strategies
[67] http://www.mgmmirage.com/missionstatement.asp.
[68] MGM Mirage Annual Report, 10k, Feburary 29, 2008. pg. 4.
[69] MGM Mirage annual report, 10k. February 29, 2008. pg 87
[70] Ibid. Footnote 1. pg 6.
[71] Ibid. Footnote 1. pg 6.
[72] Jefferies & Company, Inc. 'MGM Remains Optimistic About the Industry - Full Steam Ahead'. Consumer Casinos & Gambling. February 22, 2008.
[73] Ibid. Footnote 4.
[74] Ibid. Footnote 4.
[75] Ibid. Footnote 4.
[76] Wikipedia. 'MGM Grand Macau'.
[77] 'Former Frontainebleau Prez Lands Bigger Gig' Arendator.Ru December 11, 2007.
[78] Ibid. Footnote 1. pg 6.
[79] Ibid. Footnote 1. pg 1.
[80] Ibid. Footnote 1. pg 1-2.
[81] Ibid. Footnote 4.
[82] Ibid. Footnote 4.
[83] 'The MGM Mirage Diversity Journey' MGM Mirage. 2008.
[84] Ibid. Footnote 1. pg 10.
[85] Ibid. Footnote 1. pg 10.
[86] Ibid. Footnote 1. pg 2.
[87] Ibid. Footnote 1. pg 2.
[88] Ibid. Footnote 1. pg 2.
[89] Ibid. Footnote 1. pg 5.
[90] http://prnwire.com/gh/cnoc/comp/000725.html
[92] http://www.wikinvest.com/stock/MGM_MIRAGE_(MGM)
[93] http://www.wikinvest.com/stock/MGM_MIRAGE_(MGM)
[94] Ibid. Footnote 1. pg 11.
[95] Ibid. Footnote 1. pg 11.
[96] Ibid. Footnote 1. pg 11.
[97] Ibid. Footnote 1. pg 12.
[98] Ibid. Footnote 1. pg 12.
[99] Ibid. Footnote 1. pg 14.
[100] Ibid. Footnote 1. pg 11.
[101] http://www.reuters.com/article/technology-media-telco-SP-A/idUSN1665027820080116?pageNumber=2&virtualBrandChannel=0
[103] Wiseman, Paul. 'Legalized gambling branches out across Asia.' USA Today 2008. <>
[104] 'A current Analysis on the Outlook of Asias Casino Gambling Industry for 2006' Reuters March 26, 2008.
[105] MGM Mirage Annual Report, 10k, Feburary 29, 2008. pg. 20.
[106]MGM Mirage Annual Report, 10k, Feburary 29, 2008. pg. 4. 8
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