Another significant influence for disposable income is taxation. Taxes are expected to increase significantly in 2013 and again in 2014. (Read my article titled 5 Oversold Stocks Ready for a Bounce Higher.)
The 2014 increase will not appear the same as an outright tax, as it is largely hidden inside of payroll, but the impact will be the same. In 2014, the requirement for employer-provided "approved" health care, and increased costs of labor will result in fewer people employed and lower paychecks for many.
For example, if employers are required to provide a $2 per hour benefit, it's obvious businesses will adjust the cash compensation to equalize the value of the employee.
Smaller paychecks are the most direct method of lowering disposable income I know. Fortunately, many gaming companies have exposure outside of the U.S. and will continue to grow. The three gaming stocks to play with exposure outside the U.S. are Las Vegas Sands, MGM Mirage and Wynn Resorts.All three have exposure to Macau, but the three are very different in terms of performance domestically and internationally. The Sands also has a location in Singapore that unsurprisingly is nearly a printing press for money. The Sands Singapore location is more important than the profits it generates. The Singapore location is built in a place that has a high respect for the rule of law and by definition gives The Sands increased diversification. Royal Caribbean Cruises (RCL) and Carnival (CCL) are technically international gaming companies, but since the lion's share of their revenue comes from the U.S., they really are defacto domestic casinos. I haven't taken a trip on Carnival, but I have sailed on Royal Caribbean more than once. I watched and reviewed and was amazed at how poorly Royal Caribbean monetizes their casinos. My sample size is very small (two trips), but they were consistent with each other. As a result of poor casino management and relative costs of operations, I can't endorse either Carnival or Royal Caribbean as a gaming investment idea.
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