Casino Shares Spike on False Japan Rumor - TheStreet

Casino Shares Spike on False Japan Rumor

A rumor that Japan had legalized gambling boosted shares of Las Vegas Sands and Wynn.
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Rumors can be quite powerful for stocks, especially when it comes to Asian countries legalizing gambling.

Shares of casino operators

Las Vegas Sands

(LVS) - Get Report

and

Wynn

(WYNN) - Get Report

surged in midday trading Wednesday, after rumors began circulating that Japan was moving closer to legalizing gambling.

Fly on the Wall

, an online stock buzz site, mentioned the rumor, as did

Briefing.com

.

Before the stocks managed to settle down a bit, dedicated investors in the sector had no clue what was going on. There were zero sell-side analyst research notes. Several sell-side analysts contacted by

TheStreet.com

had no clue either -- other than that there was a rumor floating around about Japan legalizing casinos.

One buy side source who owns Las Vegas Sands says his portfolio manager wanted to know why the stock was up over 5% on zero news. He had no answer.

Of course, after some digging, it's easy to see how the rumor might have started. On Las Vegas Sands' first-quarter conference all, one analyst asked management for an update on the status of Japan possibly legalizing gambling.

A company official mentioned July 24 as an election date for the Upper House of the Diet, Japan's parliament.

Sifting through Japanese news reports today,

TheStreet.com

couldn't find any news stories on the election and its impact on possible casino legislation. The reason? The election is actually on July 29.

It looks like some wise-guy stock trader might have re-read the first quarter Las Vegas Sands transcript, saw the election date, and figured today would be a perfect day to capitalize by spreading a rumor.

The adoption of gaming in Japan will surely be a boon for Las Vegas Sands, and possibly Wynn. But for now, there appears to be a lot of hot air on the subject.

In afternoon trading, both stocks settled down. Las Vegas Sands was recently up 3% to $84.85 and Wynn was up 0.9% to $100.16.