American gaming head reassures Macau operators about US federal investigations
Wednesday, 08 June 2011
Of DOW JONES NEWSWIRES
MACAU (Dow Jones)--American casino companies operating in Macau need not be concerned about federal probes into rival Las Vegas Sands Corp.'s (LVS) business in the Chinese territory, said American Gaming Association head Frank Fahrenkopf.
The former Republican National Committee chairman also said in a Tuesday interview with Dow Jones Newswires that the Las Vegas casino industry won't likely see a recovery until U.S. unemployment rates fall to the low 7% range, underscoring how vital rapidly growing Asia casino markets have become for U.S. gambling operators.
Fahrenkopf, who will Wednesday present Las Vegas Sands Chairman Sheldon Adelson with a Visionary Award at a regional gambling conference, played down the possibility U.S. casino companies in Macau--Wynn Resorts Ltd. (WYNN) and MGM Resorts International (MGM)--could face greater regulatory risk as a result of unprecedented federal probes into Las Vegas Sands for possible lack of compliance with the Foreign Corrupt Practices Act. Las Vegas Sands has said it is cooperating with investigators and has denied allegations in a separate lawsuit the company believes sparked the investigation.
"The only reason I think that the Securities and Exchange Commission and the Justice Department may be involved is the seriousness of the [lawsuit's] allegations," he said, adding: "The interesting thing is that no action has been taken by Nevada regulatory authorities. No action has been taken by regulatory authorities here."
The Nevada Gaming Control Board has said it has initiated an investigation into the matter, and Las Vegas Sands unit Sands China Ltd. (1928.HK) has said Hong Kong's securities regulator has asked the company to produce "certain documents" for an investigation analysts believe is connected to the suit's allegations. Fahrenkopf said: "That's fine. You can look into anything, but there has been no action. So let's wait and see what happens."
Fahrenkopf also said Las Vegas-based companies are likely to continue to face challenges in their home market, whose recovery he thinks will be directly linked to U.S. unemployment data, which last week showed the jobless rate unexpectedly rose to 9.1% in May. "9.1% is not the true number. The true number is probably about 15% or 16%. People have stopped looking [for jobs]" he said.
However, Fahrenkopf added the situation has been better for some regional casinos such as those in the Midwest, where patrons can just drive to the properties for the day and not worry about booking a hotel.
Still, despite the dismal economic picture in the U.S., Fahrenkopf said he doubted the likelihood that Wynn Resorts Ltd. (WYNN) chairman Steve Wynn would try to exit the stagnant Las Vegas market by selling his Wynn Las Vegas casino to fellow Las Vegas operator Caesars Entertainment Corp., as some market players have speculated recently. Representatives from Wynn Resorts, which relies on Macau for the majority of its earnings, didn't return requests for comments.
Analysts expect Macau, the only place in China where casino gambling is legal, could rake in five times the gambling revenue of the Las Vegas Strip this year.