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Casino Stocks Continue Fall on Liquidity Questions
LAS VEGAS, NEVADA --
Shares in major casino companies resumed their almost year-long decline after briefly rising Friday. The upturn last week came as the overall market bounced after assurances that a federal bailout package for troubled financial institutions was on the way. However, haunting questions about credit and liquidity problems returned to the forefront Monday, as several casino stocks plunged.
Las Vegas Sands, which has seen its value plummet over worries about undercapitalization and the uneasy Las Vegas market which greeted its opening of the Echelon Casino and Resort, also now must contend with concerns over a Chinese government-induced slowdown in Macau.
Sands stock fell off $7.80 a share, to $36, a decline of 17.8 $.
MGM Mirage is another company caught in the process of major construction at the worst possible time. Its CityCenter project on the Las Vegas Strip is not near completion and facing rumors that partner Dubai World, the financial arm of the Dubai government, may try to withdraw from the venture.
MGM Mirage stock dropped $4.68, to $30.30, almost a 14 % loss.
The audacity and arrogance of casino management to start these gigantic projects in the face of economic troubles a year or so ago demonstrates the industry's belief that gambling would not be affected by the financial winds.
But the essence of the Bradley Theory, postulated by Online Casino Advisory's Sherman Bradley, is that by diversifying their products to capture every possible penny in good times, casino companies have sacrificed the economic surety found in gambling enterprises, and subjected themselves to the variables that affect hotel, retail, and restaurant economics.
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