It's called the gaming industry, but making money is serious business. The biggest winners aren't playing the poker tables or the slot machines, however. They're the casino owners and investors.
Kerzner International (nyse: KZL - news - people ), a luxury resort and casino operator, proved the point this week, announcing it would go private in a $3.6 billion deal. The company, which operates the Sun City resort in South Africa and the Atlantis brand of casinos, is being bought by a multi-firm partnership that includes Goldman Sachs Group's (nyse: GS - news - people ) real estate investment vehicle and a group of private equity firms. Kerzner is planning to build an Atlantis resort in Dubai, and shares of the company rose almost 13% to an all-time high of $9.07 on the news of the buyout.
Why were investors so eager to get a piece of Kerzner? Probably because, according to the Washington, D.C.-based American Gaming Association, consumers spent $28.9 billion at U.S. commercial casinos in 2004, a figure that has more than doubled since 1994. In 2004, 54.1 million Americans visited a casino--nearly a quarter of the country's population. Talk about a full house.
Internationally, gaming is popular, too. Global consumers spent almost $98 million in casinos in 2004, estimates Christensen Capital Advisors, a New York City firm that provides industry analysis to gambling companies. And while it's impossible to forecast international consumer spending at casinos over the next several years, CCA founder Eugene Christensen is betting on one thing: "It'll grow. There's still a substantial unsatisfied demand, both in the U.S. and abroad, for gaming."
Steve Wynn's latest wager proved that and then some. Four years ago, the Macau government made three 20-year operating concessions available, hoping to increase international tourism and foreign investment. Wynn Resorts (nasdaq: WYNN - news - people ), founder of the Bellagio and Mirage resorts in Las Vegas, was awarded one of the licenses. Wynn promptly sold a sub-concession to PBL, an Australian media group, for a jackpot of $900 million. (Wynn plans to open Wynn Macau, his own gaming resort, on Sept. 5, 2006, at a cost of $1.2 billion.)
Other parts of the world are catching on. Singapore lifted a ban on gaming last April in a bid to increase tourism and to compete with Macau and other parts of Asia, and MGM Mirage (nyse: MGM - news - people ) and Harrah's Entertainment (nyse: HET - news - people ) are among the Western companies hoping to build there. In the United Kingdom, the Gambling Act of 2005 loosened gaming restrictions, eliminating the 24-hour waiting period that had previously been mandatory between registering to gamble and entering a casino.
"The leading trend in gaming right now is globalization," says Christensen. "The fact that gambling takes place pursuant to government licenses prevented the globalization trends that affect other industries, like the auto industry. But since the turn of the century, that has changed. Big American companies like MGM and Harrah's are globalizing as fast as they can. These companies are becoming global enterprises."
Industry experts say the new casinos will cater to a broader range of clientele, from business travelers to families on vacation. They will aim to increase a country's international visibility, attract foreign investment and cash in on the major tax revenues that casinos must often pay their host countries. But for all their far-flung locations, the new casinos will be based on the model that Wynn pioneered, experts predict.
"Thirty years ago, casinos were slightly unwholesome places," says Arthur Benedetti, who collaborated with Wynn on Wynn Las Vegas. Benedetti is currently a partner with 5+Design, an architecture firm based in Hollywood, Calif., that specializes in gaming complexes.
"Steve Wynn was a trailblazer in creating a more sophisticated experience. He created hip environments," Benedetti says. "Before him, 90% of a casino's revenue came from gambling, and the rooms and restaurants were cheap. What Steve did was say that 25% of the revenue would come from the room, 25% from food and beverages, 25% from entertainment and 25% from gaming. It's now the formula for a successful casino; if it works in Vegas, it's being exported elsewhere."
Today, Las Vegas-style gaming is being exported around the world, and it's coming to your television set and your computer too. Bravo's Celebrity Poker Showdown, which features five "celebrities" competing in a game of No Limit Texas Hold'em, has become a cult favorite. It has averaged 773,000 viewers per episode over seven seasons. Online poker is even bigger: Worldwide, consumers spent $11.9 billion in online gaming in 2004, according to estimates from CCA. PartyGaming, a Gibraltar-based online gaming company, has a market capitalization of over $10 billion and had revenues in excess of $600 million in 2004.
Calvin Ayre, a member of this year's Forbes Billionaires List, has raised eyebrows among U.S. law enforcement officials with his Bodog Entertainment Group. An online gaming company, Bodog garnered sales of $210 million last year, much of that coming from Americans gambling online. Forbes estimates Ayre's net worth is at least $1 billion. And although the U.S. government considers the business illegal, the legalities of online gambling aren't clear enough to charge Ayre with a crime.
With online gambling so lucrative, should physical casinos be hedging their bets, diversifying into the online arena and broadcasting major games live via the Web?
"While there's a lot of consumer demand for Internet gaming, the effect on the big casinos is marginal," says Christensen.
Terry Lanni, chairman and chief executive of MGM Mirage, isn't worried either. "A person sitting at home on his computer is not seeking the same experience as a person visiting one of our resorts," Lanni writes in an e-mail. "People today come to the Bellagio or MGM Grand for much more than gambling. Sixty-two percent of companywide revenues will be from non-gaming sources this year, and at many of our resorts it will be significantly higher. Gambling is not the total of the Las Vegas experience anymore, and that is why I don't currently view this issue as a threat."
The 54.1 million Americans who visited a casino in 2004 are on Lanni's side. Nothing beats gambling in person--the chips in your hand, playing to the crowd, not to mention the free drinks, rooms and meals given out to particularly high rollers.
In honor of the worldwide expansion of the gaming industry, Forbes.com has compiled a list of the 13 hottest casinos around the world. We selected our casinos based on design, location and the availability of top-notch entertainment, lodging and dining options. Some are just around the corner, while others are located halfway across the globe. But each one will provide a high-quality gambling experience. We're willing to bet on it.