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What the Chinese Want Even More than Oil or Gold

By Braden Copeland, editor, Stansberry's Investment Advisory
Monday, January 25, 2010

I thought I was prepared for my first visit to China.
 
Back in 2006, I started visiting the country regularly for a business venture. But my first time there, I saw something completely unexpected...
 
It wasn't the booming economy. Or the jungle of brand-new skyscrapers. Or even the sheer number of people.
 
No. What amazed me most was how much the Chinese love gambling. Gamblers are everywhere. At one of the factories I visited outside Shenzhen, I noticed groups of workers playing billiards for money during their breaks. And every third storefront along the city streets had guys sitting out front playing cards and other betting games, with a pot of cash in the center.
 
For years, the Chinese have indulged their fanatical gambling habit by playing illegal lotteries and informal betting games.
 
But this year, all that will change. Dramatically.
 
Last summer – on July 1, 2009 – the Chinese government quietly approved a new gambling law, allowing lotteries to operate across the entire nation... and expanding China's gaming markets for the first time in decades.
 
According to Peking University researchers, China's lottery is estimated to grow into a colossal $150 billion industry, thanks to this new law. That's almost three times the size of the U.S. lottery market, which is currently the world's largest. It's also equivalent to the economic output of entire countries like Egypt and New Zealand.
 
And that's a conservative estimate. David Green, a gaming expert at PricewaterhouseCoopers, says the market could be as big as $600 billion per year. That's how big the illegal betting market is right now.
 
So how much money is at stake here? Let me show you...
 
This isn't the first time a new gambling law has been passed in Asia. And it's not the first time you could have made a fortune riding the wave of profits that almost always follows the passage of such laws.
 
For example, in 2001, a tiny independently governed region off the southeastern coast of China legalized casino gambling for the first time in its history.
 
You've almost certainly heard of it: Macau.
 
What you may not know is that, within just a few short years, Macau overtook Las Vegas as the most profitable gambling destination in the world. When one of the first casinos – operated by U.S.-based Las Vegas Sands – opened in May 2004, a phenomenal crowd of 30,000 folks clamored to get in. Ninety percent of them traveled from mainland China, just to experience a new and exciting gambling phenomenon.
 
And for U.S. investors who got in on the Macau trend early, the payouts were simply astounding...
 
  • Las Vegas Sands (LVS) shot up as high as 320% after the company's December 2004 initial public offering.
 
  • Wynn Resorts (WYNN), another American company that opened a profitable casino in Macau, could have made you 1,325% gains in just five years.
 
  • Melco International, a Macau casino stock, shot up as high as 1,700% after the new law was passed.
 
And Macau isn't the only place you could have seen phenomenal gains recently... Something similar happened in neighboring Thailand.
 
After years of tightly enforced bans on gambling, the Thai government decided to pass a new law allowing online lotteries last year. A company called Loxley cut a deal with the government. If you had been following the story, you could have banked 228% gains on the stock, right after the deal was announced.
 
More recently, VoDone Limited, a Hong Kong-based company, took advantage of China's new lottery law. It has launched lottery games through its website and through mobile phones.
 
The tiny stock – listed on the Hong Kong stock exchange – shot up 300% in ONE month... and rocketed 1,350% higher in six months.
 
Bottom line: Right now, you have another historic opportunity to make a fortune off Asia's gambling craze.
 
Good investing,
 
Braden




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Earnings today... Apple, Halliburton, Texas Instruments.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 37.77 +1.5% -2.8%
Gold 135.20 -0.1% +13.4%
Silver 27.93 +0.4% +47.9%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 19.39 -9.2% -8.2%
Gold Stocks 564.53 +1.3% +10.6%
10-Year Yield 3.00 +1.4% -9.6%

World ETFs
Symbol Price
Change
52-Wk
USA 122.56 +1.3% +10.2%
Canada 30.44 +1.3% +13.8%
Russia 21.63 +2.3% +16.7%
India 37.73 +1.9% +20.0%
Israel 16.47 +0.9% +9.7%
Japan 10.58 +1.0% +7.4%
Singapore 13.88 +1.0% +19.2%
Taiwan 14.72 +1.6% +17.8%
S. Korea 56.56 +1.7% +22.8%
S. Africa 70.85 +3.9% +22.9%
China 45.06 +1.4% +0.1%
Lat.America 52.82 +1.4% +6.7%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 136.18 +1.5% +14.8%
Big Pharma 64.13 +0.6% -3.3%
Internet 72.13 +0.7% +22.3%
Semis 16.03 +2.1% +28.9%
Utilities 31.21 +0.3% +1.6%
Defense 18.51 +1.3% +10.1%
Nanotech 9.99 +1.3% +0.0%
Alt. Energy 9.95 +1.4% -4.4%
Water 18.31 +1.1% +12.2%
Insurance 16.07 +1.2% +18.3%
Biotech 20.58 +1.1% +27.1%
Retail 19.65 +0.1% +28.4%
Software 24.59 +0.9% +24.1%
Big Tech 53.73 +1.0% +21.9%
Construction 12.99 +2.1% +13.3%
Media 13.57 +1.1% +25.0%
Consumer Svcs 67.26 +0.8% +23.3%
Financials 54.87 +2.4% +5.2%
Health Care 64.22 +0.7% +1.3%
Industrials 63.25 +1.6% +19.7%
Basic Mat 73.57 +1.6% +21.6%
Real Estate 55.24 +1.4% +23.8%
Transportation 91.17 +1.4% +25.6%
Telecom 22.48 +1.1% +17.1%