As reported by: Investors Business Daily
Ask a Super Bowl MVP flush with victory what he'll do next, and the classic reply is "I'm going to Disney World!"

With Vegas casinos diversifying, he might one day say, "I'm going to Mandalay Bay!"

Vegas casinos are not about just gambling anymore. They've become destination resorts.

Partly it's a response to growing competition from American Indian casinos and gambling options available close to home, says analyst Raymond Neidl of Blaylock & Partners.

One Vegas casino positioned to hit pay dirt in the new era of destination resorts is Mandalay Bay, owned and operated by the Mandalay Resort Group. (MBG)

Mandalay Bay's attractions include an 11-acre tropical lagoon and sand beach, a 30,000 square-foot spa, a 3/4-mile lazy river ride, a predator-filled aquarium and the Rumjungle nightclub. The resort also hosts sporting events and Broadway-style shows.

Weekday Boost

The newest addition to Mandalay Bay is its convention center, which opened in January 2003.

The fifth largest convention facility in the U.S, it has almost 1 million square feet of exhibit space and the largest pillarless hotel ballroom in the country.

"The convention center is the primary catalyst for our room rates rising, particularly midweek, at Mandalay Bay," said Glenn Schaeffer, president and chief financial officer of Mandalay's Resort Group.

The facility also pulls business to Mandalay's side of the Strip. Older Vegas convention centers are farther away.

It even pulls business from other cities, says analyst Mark Abramson of Bear Stearns.

"Las Vegas has been steadily increasing its market share of the convention business in the U.S. for the past decade," he said. "Mandalay, I think, will help Las Vegas pull market share. Mandalay will be taking business away from other cities."

To house convention guests, Mandalay Bay built a 43-story, 1,117-suite tower named THEhotel. It opened in December and puts Mandalay Bay's total room count north of 4,700.

Meanwhile, Mandalay Resort Group plans to develop its Mandalay Mile - which the company describes as an "interconnected complex of resort destinations" - that might eventually feature 15,000 hotel rooms.

According to its annual report, Mandalay is the only company that owns a contiguous mile of frontage of the Vegas Strip. In addition to Mandalay, it owns the Luxor and Excalibur facilities located next door.

"Mandalay Bay was master-planned to expand from the beginning," Abramson said. "Operations will be efficient as they grow it."

Operations also got a boost through better technology, he says. Less than a year ago, if a customer called Luxor and it was booked, the operator would have to transfer that customer to another of the company's hotels or ask him to call that hotel directly. Now each hotel can book rooms at the other hotels.

"These are basic things, but they're very powerful and they're relatively recent, which means the upside is just now starting to come through," Abramson said.

That upside should translate into accelerated financial growth, at least over the near term. Mandalay Resort Group posted revenue of $2.5 billion last fiscal year, which ended in January. That was up 6% from the prior year. Earnings gained 29% to $2.42 a share.

Analysts polled by First Call expect profit this fiscal year to move up 40% to $3.39 a share.

The company does face risks. One that Mandalay and other Vegas gaming firms must contend with is the move among many states to legalize some form of gambling, whether it's slot machines, horse racing, table games or a combination of the three.

Though Mandalay Resort Group has gambling properties in other Nevada cities as well as Detroit and Elgin, Ill., Abramson says it's not as diversified as its peers.

Two other risks Abramson says aren't getting enough attention are litigation and Internet gaming.

Internet gambling is "your ultimate convenience gaming," Abramson says. It's illegal in the U.S., but that could change.

The Caribbean nation of Antigua and Barbuda, a center for Internet gaming firms, won a suit against the U.S. at the World Trade Organization for violating global trade rules. The WTO hasn't decided on a remedy, Abramson says.

Mandalay's Schaeffer downplays the threat.

"Internet gaming is for people who sit alone in their rooms and stare at computer screens," he said. "There is no substitute for Las Vegas - not on a computer screen."

Wild Card

Another risk, Abramson says, is the threat of class-action suits. Trial lawyers might make gambling a cause celebre a la tobacco and fatty foods.

If a casino targets a customer - using a sophisticated marketing campaign - and that person discovers he has a gambling problem and loses all his money - he might sue the casino.

It might sound far-fetched, but Abramson points out there was such a case in Austria in which the plaintiff, a gambling addict, won.

Again, Schaeffer says he's not worried.

"I can't predict what will happen in courts in America," he said. "Most people who come to Las Vegas have such a good time they keep coming back."