JBL: The Macau Shuffle

Melco's technology arm, Elixir, will come out of this agreement as the best-positioned gaming-technology supplier throughout Asia. Elixir and Shuffle Master also plan to enter into an R&D and manufacturing agreement for future gaming machines, with a plant to be built on mainland China.

In January 2006, Shuffle Master reached an agreement with Sona to deliver wagering off property from casinos to handheld devices in, of course, where gambling is legal.

Shuffle Master announced in its last quarter that revenue, income and EBITDA were all up around 30%. Shuffle Master has a forward multiple of around 30, with a long-term growth rate of around 25%.

Shuffle Master is not without its detractors, though. There have been a few recent downgrades, citing the belief that Macau already was priced into the stock, and that a $150 million convertible debt dilution will add 2 million shares.

However, I would like some of these analysts to go to Las Vegas and stay out of Cheetahs long enough to look around. Asian people, like most people, love gambling and have to come all the way to Las Vegas to do it.

Real estate on the Kona coast of Hawaii is not an American phenomenon; it is more of an Asian phenomenon. There's nothing like it in Asia. The same goes for Las Vegas. With the close proximity of Macau to all of Asia, it is set to explode. Macau is within a three-hour flight to more than 1 billion people.

The VIP room at the Sands hotel, a $4.5 billion monster in Macau, is a place for the super rich. These people are willing to put down more than $60,000 just for a seat at the baccarat table, and ante up $1,250 per hand. Steve Wynn has called Macau "the growth story of the decade." Tourist visits are up 42% year over year.