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Gaming goes global

Nov 25, 2003 7:36 AM

For Nevada gaming operators, the world might be its next oyster.

That’s the message in a recent report released by Goldman Sachs. Essentially, GS analysts predict the potential for gaming opportunities abroad will begin to take off over the next three years.

The opportunities include rapidly increasing sales for manufacturers such as IGT, Alliance and WMS Industries, to name a few, as well as opportunities for operators to build, develop and/or manage casinos in a variety of new and existing venues.

Besides an increased demand for gaming entertainment around the world, the peaking of the U.S. and North American market have forced American companies to seek new business elsewhere.

In addition, the specter of increased taxes and the saturation of casino markets will drive competition to new locales.

"There’s no place else to grow," the report states. "The U.S. market is heavily regulated and heavily taxed, and the existing markets are in a state of aggravated competition."

Goldman Sachs predicts that over the next four years, three to five countries could ease restrictions on gaming, which would allow for the creation of hundreds of casinos (up to 100 in the United Kingdom alone).

Over the same time span, anywhere from 58,000 to 135,000 slot machines could be sold, filling the need in new markets (United Kingdom, 40,000-100,000 slots, Macau, 3,000-5,000 slots, Russia, 5,000-10,000 slots, and Canada, South Africa and Asia, 10,000-20,000 slots).

From an investment perspective, GS cites several U.S. operators (MGM Mirage, Harrah’s and Kerzner) as strategically positioned to be ahead of this growth curve because of their strong branding and balance sheets.

Equally important, these firms have "aggressive and innovative management teams willing to take a chance on international expansion," Goldman Sachs said.