Melco-PBL Entertainment (NASDAQ: MPEL) develops, owns and operates casinos in Macau, China. It is the only pure-play Macau casino traded on U.S. exchanges, and one of only six companies authorized to run casinos on the island (others include MGM, Wynn and Las Vegas Sands). MPEL owns and operates the Crown Macau Hotel Casino. MPEL draws day-trippers and tourists of all economic background with its various gambling establishments due to its strategic proximity to China and other fast-growing Asian economies.
The great majority of MPEL’s revenue is generated from its casinos. Income from other sources, including rooms, food and entertainment remains insignificant. It is also important to note that MPEL’s only source of income is from Macau.
In 2009, MPEL incurred a net loss of $308.5 million on revenues of $1.33 billion. This represents a significant increase in net loss from 2008, when the company lost $2.5 million on $1.42 billion in revenue.
MPEL holds one of only 6 authorizations to operate casinos in Macau, a privilege that serves as a significant competitive barrier against other potential market participants. Nevertheless, MPEL’s operations compete with 25 other casinos in the city. In addition, the government of Macau may allow other companies to enter the market in the future, further intensifying competition.