Bet On The House?

Recession fears have pummeled the casino stocks so far in '08. The CEO of MGM Mirage, the world’s second-largest casino operator, tells the traders if there's light at the end of the tunnel for this once red-hot group.

MGM Mirage CEO Terry Lanni said he sees a weakning in MGM’s mid-level properties through 2008. The high-end is still performing well, Lanni said, but mid-level is still hurting as consumers bear the burden of high gas prices and diminished equity in their homes. He thinks the weakness in that line of the business will rebound in 2009. There are already bookings being made for the third and fourth quarters of this year, he said.

The flipside of the weakness, according to Lanni, is that with a depressed dollar “America is on sale” and the casino industry is benefiting from more tourism from places with higher currency valuations, such as the Middle East, Asia and Europe.

To grow the business, Lanni said he is focused on dramatically expanding MGM’s properties overseas (the company recently announced plans to manage and develop a $3 billion non-gaming resort in Abu Dhabi). MGM’s revenues could be 20% international within five years, he said, noting that is a ballpark estimate. He also sees a “significant increase” in the company’s non-gaming businesses of real estate, food and entertainment going forward.

MGM is cheaper than its big competitor, Las Vegas Sands , Guy Adami said. Once fears about the Macau operations are quelled, he thinks MGM could “get its wheels back.”

Karen Finerman disagreed, saying the stock is still too rich for her.

Tim Seymour lauded MGM for its overseas exposure. The gaming market for places like the Middle East and Russia is exploding, he said. That story has legs and could be reason enough to buy MGM.

Jeff Macke put it bluntly: “I’m terrified of casinos.”

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Trader disclosure: On Feb.21, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (INTC), (YHOO); Seymour Owns (AAPL), (CSCO), (F), (MSFT), (S), (TSO), (SBUX), Seygem Asset Management Owns (CCJ), (TIE), (GAF) Seygem Asset Management Is Short (EEM); Finerman’s Firm is Short (IYR), (IJR), (SPY), (MDY), (IWM), (LEH) and Owns (LEH) Puts; Finerman’s Firm Owns (VLO), (TSO), (MSFT), (KSS), (JCP), (AAPL), (TSO), (VLO), (YHOO), (WMT), (MO), (AEO); Finerman Owns (GS); Dennis Gartman Owns (CIM), (COIN), (PRB), (SID), (PAL), (UNG), Gold, (UUP), (SWC), (HOV), (GWR), (GMO); Gartman is Short (SDS), (COH), (HOG), (RTH), (MMM), (GM), (DCR), (AAPL), (DRYS), CIBC; Gartman Index Owns Gold, the EUR, the Canadian Dollar, Sugar