Inside Asian Gaming

43 Briefs Wynn Resorts was the only operator among the four largest that saw growth between the first three quarters of 2007 and the same period in 2008: Its net income rose 92% to US$369.8 million from $192.7 million. As for the other three largest operators, Las Vegas Sands Corp (LVS) and Harrah’s each lost money during the first nine months of 2008, while MGM Mirage’s profit plunged. LVS lost US$52.2 million from January through September 2008, after earning $76.8 million for same three quarters in 2007. Harrah’s lost $415.1 million in the period in 2008 after earning $667.2 million in 2007. MGM Mirage earned $292.7 million, down nearly 59% from $712.21 in the same period in 2007. Wynn Praised for Cost Cuts Wynn Resorts Ltd announced a plan to reduce expenses by up to US$100 million annually at Wynn Las Vegas and the recently opened $2.3 billion Encore. Wall Street analysts lauded the plan Wynn Resorts said it will cut salaries, trimworkweeks and suspend 401(k) contributions, but not lay off workers—something other Strip casinos have been doing since last year. Throughout 2008, gaming companies such as MGM Mirage, Harrah’s Entertainment, Station Casinos, Las Vegas Sands Corp., Boyd Gaming Corp. and International Game Technology have laid off workers in order to shed costs. Lowering expenses, analysts said, is an important step in a challenging market, even with a company such as Wynn Resorts, which has been credited with having a better-than-average balance sheet. Wynn executives also announced that the company had US$1.1 billion in cash, $375 million in loans coming due over the next two years, and that the under-construction Encore at Wynn Macau is fully financed. LVS Hit With Shareholder Lawsuit The Las Vegas Sun reports that veteran securities fraud attorney Marc Henzel has filed a lawsuit against Sheldon Adelson and the other Las Vegas Sands Corp (LVS) directors, alleging they failed to properly oversee the casino-resort giant and are responsible for a huge decline in the value of its stock. The suit was filed on January 16th in Clark County District Court on behalf of shareholder Caleb Hartmann against the board of directors: Adelson (chairman of the board and chief executive), Irwin Chafetz, Charles Forman, George Koo, Michael Leven, James Purcell, Irwin Siegel andWilliamWeidner. In a response to a similar lawsuit filed in November, attorneys for LVS and the directors denied the allegations, claiming the lawsuit was improper because the plaintiffs had failed to first make a proper demand of the board of directors before suing. The response also said:“Plaintiffs’complaint contains no particularized allegation of any ‘intentional misconduct, fraud or a knowing violation of the law.’” The response also pointed that LVS was not alone in experiencing problems in 2008. “This opportunistic lawsuit comes in the midst of a global recession that has deprived businesses worldwide of patrons and access to funds for operations and expansion,’ the response said. Citing news reports and LVS regulatory filings since November, the suit recites several issues at LVS that caused its stock to fall from more than US$125 per share in November 2007 to less than $7 per share in November 2008. The directors are accused of failing to “sufficiently control a company so clearly dominated by its majority shareholder, director defendant Adelson” and their actions have “called into question the financial solvency of a once successful and sound company, and massively diluted the value of LVSs shares for its current shareholders by having to raise significant amounts of new capital.” The suit seeks an order requiring the defendants to pay unspecified monetary damages to the plaintiff, on behalf of LVS, to cover damages sustained by LVS because of the directors’ alleged “breaches of fiduciary duties, abuse of control, grossmismanagement and waste of corporate assets.” The suit also seeks to have each director reimburse LVS Sands for all profits, benefits and other compensation paid to them. South African Revenue Growth Plateaus The Casino Association of South Africa (CASA) reported that gross gaming revenue grew from 6.22 billion rand in 2001-02 to R15.62 billion in 2007-08. Gauteng, with its seven casinos, was by far the biggest in terms of revenue generation, grossing R1.41 billion in the last quarter of last year, followed by Western Cape with R567 milion in the same period. However, the figures show a levelling off in growth during last year. The economic downturn, as well as the fact that there are few new casino licences up for grabs, is likely to put the brakes on revenue growth in the sector over the coming year. Caesars Gauteng