Casinos used to have Moats, what happened to them?

Sooooo.......

I've had a couple of wins this reporting season, but boy oh boy, this isn't one of them. The icing on the cake was the highly dilutive cap raise just announced along side the disastrous FY results.

In the spirit of learning more from your mistakes than you do from your winners, I thought a bit of public self flagellation might be in order.

Re-visiting why I bought in the first place:

• Sole casinos operating in Adelaide, Auckland, Hamilton, Queenstown ie a natural Monopoly creating a wide moat
• most of the bad news is (increased regulation, fines for bad behaviour etc)
• the Chinese will return - ie visitor numbers will return to normal levels
• gambling is largely recession proof
• the Sky City rebuild will make it a destination for night life, conferences etc significantly
• Carded gaming won't make too much of dent

So far only the first leg is still standing.

On the upside, things aren't quite as bad as with Star (ASX:SGR).

My returns look like this:

OUCH !

The lessons are what? There are probably more, but this is what I came up with:

• wait til ALL the bad news is in. I did jump the gun a bit over the fines and legislative issues but thought they were already priced in
• recessions hit gambling too, and the Auckland branch is the main money spinner here. NZ has not come out of its recession yet and might not for a while to come.
• International visitor numbers are easy to track and I didn't. They remain soft
• Re-development costs and timelines always over-run. Anyone who has done up their house knows this one.
• Carded gambling appears to have permanently reduced revenue per visitor

I grew up in the UK in an old house with no heating. It got really cold and damp in winter. Personal hygiene was a matter of running a hot bath and jumping in. It was a claw foot, cast iron bath that sucked most of the heat out instantly. You could lie down, fully immersed and feel really warm for about 5 minutes before the water temperature noticeably dropped. It was colder out, than in though, and the conundrum was always whether it was best to lie in the bath slowly getting colder or bite the bullet and get out, start shivering and try and dry yourself with a damp towel as fast as possible.

I've got that feeling again.