The expected MGM MIRAGE merger was with Harrah's Entertainment Inc., not Mandalay Resort Group, however.

News of MGM MIRAGE's $7.65 billion offer on June 4 for Mandalay still wasn't a surprise given several factors facing the gaming industry, Farley said this week.

"The reason I think we're seeing this deal now and why we may see more is (gaming) is a mature industry," she said. "As earnings growth and earnings comparisons become more difficult, like other maturing industries, there's very limited (growth) opportunities and new markets that have not materialized."

The timing for megadeals is ripe, she added.

"After the travel disruption from 9-11, we had good recovery that drove strong comparisons in the first half of (this) year," Farley said. The second half of the year will have surpassed the anniversary of the recovery period from the Sept. 11 attacks, meaning that growth from last year will "flatten out," she said.

Mergers create cost savings as departments and overlapping positions are consolidated, she said. "Corporate expense can be something like $50 million (a year) for some of these big companies," she said.

While not all analysts believe more mergers are on the horizon, they generally agree that this proposed deal makes sense for MGM MIRAGE because of the benefits of cost savings and the addition of higher-end properties such as Mandalay Bay. Mandalay Bay would help MGM MIRAGE compete with the new Wynn Las Vegas resort and the continually expanding Venetian resort.

(The outcome of the MGM MIRAGE and Mandalay talks had not been determined as In Business went to press Wednesday.)

In theory, mergers will continue to occur as long as companies believe they can cut costs and become more efficient, said Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

Corporations will only stop or slow their merger activity when they get so large that they become unwieldy, he said.

"A lot of mergers turned out not to live up to expectations because (the companies) became so large that they became difficult to manage. They become fat, dumb and happy," Schwer said. "If it turns out to be inefficient then they jettison and reorganize properties."

Besides reducing costs and improving efficiency, mergers can change a company's culture to become more corporate and less focused on local growth, he added.

"They're looking for their assets to be productive ... they're going to look at opportunities elsewhere," Schwer said. "Even though we've had some strong growth here, Nevada's component of the total gaming market (nationwide) continues to shrink as companies get bigger and have a wider set of options."