Dubai Debts Fears Hit Casino Industry
Fears over Dubai's announcement that they will be delaying payment of debt has hit casino stocks. News broke on Friday that a possible debt default at Dubai state-owned conglomerate Dubai World DBWLD.UL could derail a budding economic recovery. While European banks were likely to be more exposed than those in the US, casino companies were not off the hook.
Casino operator MGM Mirage (MGM.N), which is a partner with Dubai World in the $8.5 billion CityCenter project in Las Vegas, saw shares dip 9 percent in early trade on the New York Stock exchange.
"Dubai is a large holder in MGM shares," said Susquehanna Financial Group analyst Robert LaFleur. "If they're in a position where they're seeking liquidity, you have to wonder whether they'll look to those shares as a source of potential liquidity."
MGM Mirage said on Thursday that it does not expect Dubai World's restructuring to affect CityCenter.
Shares of other casino operators were down a bit on Friday amid talk of a possible Dubai debt default.
"The Dubai default fears have made investors nervous in the casino sector that has exposure in the emerging markets," said William Lefkowitz, options strategist at brokerage firm vFinance Investments.
Shares of Wynn Resorts Ltd (WYNN.O) were down 2.6 percent at $63.67 on Nasdaq. Shares of Pinnacle Entertainment Inc (PNK.N) were down 1.6 percent at $10.78 on the NYSE. Shares of Las Vegas Sands Corp (LVS.N) were down 3.5 percent at $15.92 on the NYSE.
Jagajeet Chiba, Gambling911.com
