Inside Asian Gaming

INSIDE ASIAN GAMING | April 2010 8 rarely pays to give in to such speculation— especially in Macau. The wider point is that when such episodes of uncertainty occur, they tend to leave in the mind of external analysts and commentators the impression Macau is a difficult market to call in political and regulatory terms. It also leads to the impression that the process by which policy is formulated is also not easily understood and therefore not easily subjected to rational analysis. That inevitably leads to a certain nervousness or at least caution on the part of investors. What we can say is that if the Macau governmentwereminded toact ina‘punitive’ way against LVS, it would not necessarily be a random act without any understandable context, even if the precise circumstances may not be public knowledge at this stage. As always in Macau, context counts. It’s also worth noting that the question mark over table allocation for LVS on plots five and six comes at precisely the moment LVS was due to complete a new deal with lenders for US$1.75 billion credit. That deal has been reported in the financial press as an important element in ensuring the resumption of work on plots five and six. An earlier incident involving LVS’s Macau market rival Steve Wynn may be instructive in providing some context to the present Macau conundrum. The length of time it took the Macau government to process paperwork for Mr Wynn’s first Macau project—WynnMacau—iswelldocumented. The delays happened to coincide with Mr Wynn’s decision to go public on his desire for legislation to allowdirect credit issuance and actionable debt recovery from high roller players in the Macau casino market and the Macau courts. It’s possible, of course, that the two things—government bureaucratic delays and his public statement on credit issuance—were coincidental. Many think theywerenot. It’s certainly the case that since then, Mr Wynn has refrained from talking about Macau gaming policy in public. That strategy appears to have paid dividends, with no reported regulatory or government problems for Encore Macau, the new VIP- focused property next door to Wynn Macau due to open to guests on 22nd April. By contrast, LVS, Wynn’s market rival in Macau, had something of a track record for public announcements unlikely to endear the company to the Macau government— somethingthatcontinueduntilthedeparture of WilliamWeidner in March 2009. Public lobbying In November 2008, Mr Weidner, then President and Chief Operating Officer of LVS, hinted to journalists at that year’s Global Gaming Expo (G2E) in Las Vegas, that the suspension of building work on Cotai plots five and six and the laying off of 11,000 workers, was linked to Macau politics and visa restrictions imposed by China on its citizens travelling to Macau, as well as to the global credit crisis that hit then highly leveraged LVS so hard. “Macau, because of what has happened, has kind of created for itself unfinished or semi-finished projects. I don’t think we’re alone in not completing developments,” Mr Weidner told the journalists. Although the Macau government gave no official reaction to Mr Weidner’s statement at the time, it’s difficult to imagine it went down especially well. The government did, however, make it clear where it thought the responsibility for suspension of Cotai five and six lay. “Because of its over-leveraged borrowing in the US and around the world, it’s normal and expected that it [LVS] has to suspend some of its projects,” said Macau’s then Chief Executive Edmund Ho in his next annual policy address following the 2008 financial crisis. Repeat ‘offender’ Mr Weidner wasn’t finished with his high Artist’s rendering of completed Cotai plots five and six Macau Policy William P. Weidner Secretary for Economy and Finance Francis Tam