Inside Asian Gaming

INSIDE ASIAN GAMING | April 2008 16 Feature estimated at US$26 billion. That can buy a great deal of legal advice, even at the prices charged by top US attorneys. Business model If the Suen case goes to trial as scheduled on April 15, then Her Honor Judge Michelle Leavitt and 12 jurors selected from the Nevada citizenry sitting at the Eighth Judicial District Court in Clark County could influence the business model of LVS in Macau for good or for ill for years to come. The case is listed in court records as: “Richard Suen versus Sheldon Adelson”. The US Securities and Exchange Commission deposition filed by LVS in May 2007 doesn’t specify whether Mr Suen is seeking 2% of the net take for the lifetime of LVS’s current Macau licence, in perpetuity for as long as LVS stays in Macau or just a one year, one-off payment. Phone calls and e-mails from Inside Asian Gaming toMr Suen’s Las Vegas attorneys and to Mr Adelson’s lawyers seeking clarification on this point went unanswered up to the time of going to press. Winners and losers If Mr Suen is seeking a rolling payment, then if he wins it could have a major long term impact on LVS’s Macau earnings and possibly on the company’s share price. To borrow the catchphrase used by charity fundraisers, a court decision in Mr Suen’s favour could be‘the gift that keeps on giving’. As LVS’s Macau revenues rise, so would Mr Suen’s payday. Mr Adelson has, though, already scored a minor victory on this long and winding road of litigation. Mr Suen’s suit was first filed in October 2004, according to the SEC deposition, but it’s taken nearly three and a half years to be listed for trial. In theory, LVS’s current gaming license—technically a sub- concession from the Galaxy Entertainment Group licence—runs until June 2022,though under the terms of the agreement it can be revoked by the Macau government at only a year’s notice any time after 26th December 2017. Unless a Nevada judge chose to back date any profit percentage payment to Mr Suen, any such payout could be limited to a ten-year deal. If the Nevada court does find in Mr Suen’s favour, then depending on what legal advice LVS receives post-trial, the company might choose simply to hand in its current gaming licence on or before the 2017 date and reapply for a new one. This would make sense if LVS felt such a move would free it of any legal obligations to Mr Suen identified by the Nevada court. Investor view A 2% drain on LVS’s net Macau profit would certainly be enough to furrow the brows of investors. In Q4 2007, LVS revenues were split roughlyequallybetween itsUSand Macau operations. So on a group net profit for Q4 2007 of US$39.9 million, a 2% share of US$19.95 million would be US$399,000, though the precise figure for the Macau net would still need to be adjusted to reflect the differing operational overheads of the two markets. As if the possibility of having to stump up that much money and more in future quarters wasn’t bad enough, Mr Suen’s American lawyers are also likely to try and parlay Mr Adelson’s reputation as a tough businessman and to examine the circumstances under which he was awarded a Macau gaming license. Written evidence briefly made public during pre-trial proceedings and then re-sealed at the order of the court hint that this will be one method of attack by the Suen legal team. New liabilities The prospect of a public slanging match in court is good knockabout fun and could Clark County Regional Justice Center