Inside Asian Gaming

May 2014 inside asian gaming 21 leading gaming revenue in Macau, as do the other five licensees. LVS, its affiliate Sands China Ltd. and Galaxy declined to comment on their partnership for this article. Mr Oliveira testified the LVS-Galaxy relationship was “very bad” and “sour” when he was asked to mediate in late 2002. Although there were grounds for Macau to revoke the license and leave both companies empty-handed, that threat rang hollow. Mr Oliveira asserted that using one of the designated runners-up from the tender process was no longer an option after concession contracts were signed, and holding a new tender which LVS was likely to enter and win would have reflected poorly on the whole process. He also dismissed the idea of liberalization with just two licensees. Some believe that it was in the midst of the Galaxy dispute that LVS suggested developing Cotai beyond The Venetian, giving Macau authorities a further incentive to keep it in the mix. On the other hand, they didn’t want to cut out Galaxy, the only Chinese company among the new bidders. Mr Oliveira says it was he who proposed the idea of a subconcession—a tool that had been used to delegate pieces of the operating concessions at Macau International Airport—to allow both Galaxy and LVS to run casinos independently. When the public reacted favorably to the decision, the other licensees sought and were granted subconcessions. SJM sold its subconcession for US$200 million to a partnership between MGM and Stanley Ho’s daughter Pansy Ho, and Wynn sold its to Melco Crown Entertainment, a partnership between Mr Ho’s son Lawrence Ho and Australian casino magnate James Packer, for $900 million. From a tender for three gaming licenses, Macau wound up with six operators. vocation,” adds Mr Green. “Ever since the opening of Sands Macao and the subsequent growth of Sands China’s properties at Cotai Strip, Macau has increasingly shown itself to be a world-class destination that has so much to offer beyond gaming,” says Edward Tracy, president and chief executive of Sands China, LVS’ Macau subsidiary. “And throughout it all, Sands Macao has maintained its appeal as a sophisticated luxury destination delivering incredible entertainment, dining and more.” Sands Macao’s success began the metamorphosis of Las Vegas Sands into the world’s most valuable gaming enterprise. “It turned the company from a Las Vegas company with two assets—Venetian Las Vegas and the Sands Expo Convention Center—into a true international gaming company,” Global Market Advisors partner Andrew Klebanow says. LVS went public in December 2004, barely six months after the Sands Macao opening, with an initial stock offering valuing the company at US$10 billion. At its peak, its market capitalization exceeded $100 billion. Its value currently is more than $60 billion. The growth of LVS also transformed its founder and chairman from a Vegas B-lister into the leading figure in global gaming. “Sheldon Adelson will be remembered as the person who was the most bullish on Macau,” says Mr Fischer. “He talked about investing $13 billion in Cotai and building 21,000 hotel rooms. It seemed outrageous. But we totaled up the spending [including planned new Cotai resorts]: Galaxy $13 billion, Sands China $11 billion, the others each about $6 billion. But Adelson was always looking at getting other investors and selling off assets. So even he didn’t forecast today’s level of success.” Editor at Large Muhammad Cohen also blogs for Forbes on gaming throughout Asia and wrote “Hong Kong On Air,” a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie. He can be contacted at mcohen@asgam.com. Some believe that it was in the midst of the Galaxy dispute that LVS suggested developing Cotai beyond The Venetian, giving Macau authorities a further incentive to keep it in the mix. On the other hand, they didn’t want to cut out Galaxy, the only Chinese company among the new bidders. Sheldon Adelson will be remembered as the person who was the most bullish on Macau,” says Aaron Fischer, who heads consumer and gaming research for CLSA Asia Pacific Markets. Cover Story