1. A tale of two cities: What Las Vegas and Macau taught legendary investor Mark Mobius

A tale of two cities: What Las Vegas and Macau taught legendary investor Mark Mobius

Mark Mobius takes a closer look at Las Vegas, and compares it with the casino capital of the world -- Macau.

By: | Updated: August 19, 2017 10:42 AM
Mark Mobius draws lessons from the gambling world and says that they can be applied to the world of investing as well. (Image: Reuters)

Legendary emerging markets investor Mark Mobius, who is not a gambler himself, was amused by the energy of Las Vegas during his recent trip to the casino city. “It had been quite a while since I’d been to Las Vegas. The activity and energy of the place really surprised me, even though I don’t gamble,” Mark Mobius, Executive Chairman, Templeton Emerging Markets Group, wrote in his latest blog. Mark Mobius draws lessons from the gambling world and says that they can be applied to the world of investing. “Don’t gamble more than you can afford to lose!” he says.

Mark Mobius shares how he learnt not to gamble away money, the hard way. He recounts that on his first trip to Las Vegas in 1961, he reached the city late at night along with some of his students. Mark Mobius says that he didn’t have enough money for all of them to sleep in hotel rooms. “We arrived very late at night and we didn’t have enough money for a hotel room. We took a nap in one of the hotel lobbies and then proceeded to lose the rest of the cash we had in the casinos,” Mark Mobius writes, adding, “That experience put me off gambling for life.”

Macau beats Las Vegas as casino capital

More revelations were in store for Mark Mobius when the seasoned investor learnt an interesting fact about the standing of Macau vis-a-vis Las Vegas. Mark Mobius was in for a surprise when Jordan Pong, an entertainment analyst at Templeton, told him that Macau, in China, brings in more casino revenue than Las Vegas.

“I conveyed my surprise that Las Vegas looked even busier than Macau when we visited companies there a few months earlier,” Mark Mobius writes in his blog. However, that was not to be. “Macau — a former Portuguese colony — boasts a gaming industry that dwarfs Las Vegas. So much so that’s it’s even been called ‘Las Vegas on Steroids’,” Mark Mobius says.

He goes on to walk the readers through intriguing numbers. While Las Vegas has about 150 hotels with a total of about 132,000 rooms, Macau has roughly 75 hotels with about 35,000 rooms. Las Vegas also boasts of much larger hotels than Macau. Another interesting data point unravelled by Mark Mobius is that Las Vegas also gets higher footfalls — 43 million in 2016 — compared with 31 million for Macau.

However, here’s the catch. When it comes to total revenue, Macau casinos win hands down. Pointing out the anomaly, Mark Mobius writes that in 2016, the total revenue for Las Vegas hotel/casinos was at about $25 billion, compared with approximately $32 billion in Macau. Another striking difference between the two is the source of income. Gaming forms less than half of the revenue in Las Vegas, while it contributes to 80% of the total revenues in Macau.

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