Scientific Game

Counter Measures

The battle between Steve Jacobs and his former employer LVS looks set to run and run

Sunday, 01 May 2011 16:49
Share
Visit us

What sort of valuation headwinds could Las Vegas Sands Corp (LVS) face from the many legal actions and counter actions stemming from Steve Jacobs’ dismissal as CEO of Sands China last year?

The ‘main show’ so to speak is the various investigations by US federal authorities against LVS. That’s where the bulk of the regulatory and balance sheet risk lies. The ‘side show’ is the smaller-scale but at times highly personal fight directly between Mr Jacobs and his ex-employer. But given that mud slung in the side show act has been credited with sparking the feds’ inquiry, the two things have become inextricably linked. If the federal investigations come to nothing, then that will arguably strengthen LVS’s hand in its litigation with Mr Jacobs. One thing seems clear. With each week that passes, the waters seem to be getting increasingly muddied with suit and counter suit between Mr Jacobs’ side and LVS. The grounds on which the sides are fighting have also been modified over time.

Back in March at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum in Las Vegas, Sheldon Adelson, chairman and chief executive of LVS, said one of the ‘reasonable cause’ justifications for firing Mr Jacobs was that he had pursued direct premium business in Macau (i.e. VIP play without the middle man). Mr Adelson said this was against management instructions and at the cost of damaging relations with Macau junket operators.

“One of the reasons why we fired him [was because] we told him not to get involved with direct premium players the way he wanted to,” Mr Adelson said.

“He kicked off all the junket reps. Now, we have to build back the relationship,” he added.

Then in April, LVS issued a counter suit against Mr Jacobs in which the company claimed Mr Jacobs had been too lenient with a junket, refusing to bar it from doing business in the company’s Macau properties even though a Reuters investigation had linked it with a triad boss.

“Jacobs claimed (in June 2010) that the revenue associated with those junkets was substantial and that he owed the shareholders of Sands China a fiduciary duty, the performance of which would be placed in question if the agreements were terminated,” the counterclaim says.

In an 8K filing to the US Securities and Exchange Commission in May 2010, LVS gave another perspective on the Macau VIP market. In a section titled ‘Business Overview’, the company said: “At the same time, we are focused on growing our share of the premium players segment via direct marketing efforts and by leveraging our Paiza brand and luxury amenities that enable us to differentiate our properties from those of our competitors, who typically rely more on Gaming Promoters for their VIP players. To attract premium players, we offer them accommodations in our exclusive Paiza suites and Paiza Mansions, complete with private gaming and concierge services. Our management estimates that our premium player table revenues generate a gross margin that is approximately 1.0 to 1.5 times higher than our typical VIP player table revenues.”

While companies reserve the right to adapt business strategies to market conditions, the above statements do indicate the ebb and flow in the debate between Steve Jacobs and his ex-employer about who did what and when. Attorneys for both sides recently filed a status report with the Clark County District Court in Las Vegas where Mr Jacobs’ suit and LVS’s counter suit are due to be heard. The lawyers indicated they’re moving toward a June 2012 trial on Mr Jacobs’ claims. Don’t expect an early resolution.

Current Issue

2017 Inside Asian Gaming Power 50: Meet the Selection Panel

2017 Inside Asian Gaming Power 50: Meet the Selection Panel Andrew W Scott CEOInside Asian Gaming Inside Asian Gaming’s CEO first entered a casino in 1986, fell in love with the surrounds and has been around them ever since. Andrew founded World Gaming Group and launched WGM in 2009, took over IAG in 2015, debuted a third magazine called High Life in ... Tuesday, 05 December 2017 19:28

2017 Inside Asian Gaming Power 50: Ten Years On

2017 Inside Asian Gaming Power 50: Ten Years On A decade of making the Asian Gaming Power 50 By Andrew W ScottIAG Asian Gaming Power 50 selection panel Chairman EVERY year for the last decade, Inside Asian Gaming has completed a task that is fascinating, exhilarating, intellectually stimulating and industry-defining whilst simultaneously bei... Tuesday, 05 December 2017 19:12

2017 Inside Asian Gaming Power 50: Number 19 -  James Murren

2017 Inside Asian Gaming Power 50: Number 19 - James Murren 19 James Murren CHAIRPERSON AND EXECUTIVE DIRECTORMGM China Holdings POWER SCORE1,165 LAST YEAR12 CLAIMS TO FAME • Chairman of the world’s second largest casino company • Credited with keeping MGM Resorts afloat during the GFC If the strong domestic results achieved by MGM China’s pa... Tuesday, 05 December 2017 14:44

2017 Inside Asian Gaming Power 50: Number 18 - Chen Lip Keong

2017 Inside Asian Gaming Power 50: Number 18 - Chen Lip Keong 18 Chen Lip Keong CEO AND EXECUTIVE DIRECTORNagaCorp POWER SCORE1,234 LAST YEAR20 CLAIMS TO FAME • Casino monopoly within 200 kilometers of Phnom Penh runs to 2035, license to 2065. • Owns 65% of first gaming company ever listed in Hong Kong • NagaWorld extension Naga2 debuted in Novemb... Tuesday, 05 December 2017 14:39