Inside Asian Gaming

INSIDE ASIAN GAMING | April 2008 18 Feature is still extremely popular, though revenue slipped 17.6% year-on-year in Q4 2007 to US$282.8 million from $343.3 million in the equivalent quarter of 2006.Factors probably include competition from new properties such as its sister venue, the US$2.4 billion Venetian Macao, which opened in late August 2007. Venetian Macao recorded US$500.4 million in sales during its first full quarter, becoming the group’s biggest revenue contributor. It won back 2.72% of the US$12.34 billion in VIP gaming chips it sold. This was below the company’s target of 3%, but still above the industry average of 2.4%. The Sands Macao sold US$5.92 billion of VIP chips in Q4 2007. The combined sales of the two venues made up an estimated 24% of Macau’s high- roller market, though whether LVS can maintain or build on that performance in thewakeof CrownMacau’sVIP commission challenge remains to be seen. Legal lottery Before anyone gets too downhearted about LVS’s prospects in the Macau market in general, and in the Suen case in particular, there are a number of factors potentially counting against any plaintiff in Mr Suen’s situation. One is that American corporations and their lawyers tend to have plenty of practice at litigation. Another is that in all civil cases, the deciding factor in sorting the winner from the loser is often the depth of a participant’s pocket, not necessarily the moral or practical strength of their argument. At the moment, the public position between Mr Suen and Mr Adelson is that neither side is prepared to back down. The reality is that once any civil trial begins, the lawyers on both sides are constantly assessingtheirclient’sprospectsandadvising on whether to settle on some kind of deal or go the distance. At the time IAG went to press, a pre-trial hearing was due in Judge Leavitt’s court on April 7. Coincidentally, this is the same day and in the same court complex that a high profile criminal case against OJ Simpson, the former American footballer and previously acquitted murder suspect, is due for trial. Trade off Unlike in a criminal case, the parties in a civil case have the option of walking away before all the evidence has been put to the jury, if the plaintiff and/or defendant thinks it will offer the best available deal or best chances for damage limitation. ‘He said, we said’ cases are rarely black and white like a game of draughts, and usually much more like a game of poker. This writer has attended enough high profile civil cases in the High Court in London to have an inkling of the amount of horse trading that goes on behind the scenes. The recent divorce settlement hearing involving the former Beatle Sir Paul McCartney and his ex-, Heather Mills McCartney, is a good example. Even if Mr Adelson fends off Mr Suen, he may have to deal with two other claims. In January 2006, Clive Basset Jones, Darryl Steven Turok (also known as Dax Turok) and Cheong Jose Vai Chi (aka Cliff Cheong), filed an action against Las Vegas Sands Corp., Las Vegas Sands, LLC, Venetian Venture Development, LLC and various unspecified individuals and companies in the District Court of Clark County, Nevada. The plaintiffs assert breach of an agreement to pay a success fee in an amount equal to 5% of the ownership interest in the entity that owns and operates LVS’s Macau gaming sub-concession as well as other related claims. Latest claim In February 2007, a company called AsianAmericanEntertainmentCorporation, Limited (AAEC) filed an action against Las Vegas Sands, Inc., Venetian Casino Resort LLC, Venetian Venture Development, LLC, William P. Weidner (President of LVS) and David Friedman (now co-chairman and co- CEO of Macao Studio City), claiming breach of contract by LVSI, VCR and Venetian Venture Development of an agreement under which AAEC would work to obtain a gaming licence in Macau. The claim said that a successful outcome should have resulted in AAEC jointly operating a casino, hotel and related facilities in Macau with Venetian Venture Development. AAEC was to have received fees and a minority equity interest in the venture, according to the claim. Cynics may be reminded of the old saying: ‘Success has many parents, but failure is an orphan.’ Whatever the strengths of these claims or the outcome of Mr Suen’s particular case, litigation over LVS’s Macau licence looks set to run for a little while longer. None of this amounts to a crisis or even a turning point in the Macau good news story, as far as LVS is concerned, but it is increasing the nervousness of some already bearish analysts. Mr Adelson has said many times that observers need to focus on the general trend, not individual blips on the graph.