Inside Asian Gaming

September 2014 inside asian gaming 7 Back in February in a conference room at a plush hotel in Tokyo’s upscale Roppongi district, a couple hundred dark-suited Japanese business types had turned out for a weeklong investment forum sponsored by CLSA. The ink was barely dry on a bill in the National Diet to legalize casinos in the world’s third-largest economy and they were there to size up the opportunities. Asia’s US Big Three—Las Vegas Sands, Wynn Resorts, MGM Resorts International—were presenting. And then it happened: the inevitable Adelson moment. Addressing a media briefing on the forum’s first day, the chairman and chief executive of Las Vegas Sands scored his headline. “We will spend whatever it takes,” he said. “Would I put in $10 billion? Yes.” The cab driver’s son who at last glance occupied 14th place on the Forbes “World’s Billionaires” list had stood the week’s proceedings on their ear. He wasn’t finished either. “We could pay all cash,” he said. “We don’t have to, but we will borrow money in a typical mortgage-to- value ratio.” The point, he said, is that “We can spend $10 billion without borrowing money,” and he didn’t forget to mention his competition, which happens to include just about every heavyweight casino corporation on the planet, adding with aplomb—“They can’t.” “Whatever it takes” —it became the phrase that would dominate the news coverage of that conference for the rest of the week, and that of a simultaneous gathering at another Tokyo hotel of the Japan Academy of Integrated Resort and Gaming Studies. As for the “$10 billion,” much of the latest analyses of Japan’s potential suggest an investment of even half that isn’t likely to return the 20% that is the oft-stated litmus for LVS in any market that looks good to it. You have to think Sheldon Adelson is familiar with those studies. But what he wanted his audience to know (and to believe, better yet) is that he’s the man to beat in Japan. Which is debatable, of course. He’s got a brilliant lineup of rivals, A-list all the way, and what they’ll also offer to win a license in a market that is conservatively forecast to be worth $7 billion a year out of the gate in gaming alone (some say as high as $15 billion) will be exciting, and as the banks will be eager to buy into such a promising market, capital isn’t going to pose a major obstacle for any of them. What cannot be disputed, though, what the Japanese will not fail to consider, is that Sheldon Adelson has created the greatest money-making machine the gaming industry has ever seen, bigger in terms of market capitalization than the rest of the US-listed industry combined, four times bigger in US dollar terms than Genting Singapore, five times bigger than Crown Resorts. If you’d bought LVS at its recession-era bottom in the spring of 2009—when Mr Adelson Sheldon Adelson Chairman and CEO Las Vegas Sands Corp. anted up $1 billion from his own pocket to keep the bondholders at bay—as of this writing you’d have made back your money 46 times over. Last year, he walked away from his $30 billion EuroVegas plan in Madrid and Wall Street didn’t bat an eye. LVS is also the Asian industry’s pre-eminent money-making machine. The company generated US$13.77 billion in revenue in 2013, and more than 86% of it was made in Macau and Singapore, together with 89.8% of its world-leading EBITDA of $4.76 billion. This was accomplished principally by virtue of its dominance in Macau, the largest casino revenue market in the world—and we can quibble all we want over VIP share—it dominates. It dominates with more hotel rooms, more gaming floor space, more retail shops and restaurants and entertainment and MICE facilities than everybody else. In The Venetian Macao it operates the city’s most recognized and most visited destination. Macau as it exists today is largely an outgrowth of the vision that went into its creation. Now all the others are pouring everything they’ve got into Cotai, the reclaimed swamp they once shunned, to try to replicate its success. But it’s about more than earnings statements. It’s the hold Sheldon Adelson exerts on the Asian imagination in the form of The Venetian and in Singapore with Marina Bay Sands, icons that have set the standard against which anyone desiring to play in his game must measure up. His $2.7 billion, 3,000-room Parisian Macao will feature a half-scale replica of the Eiffel Tower. The copy on the Las Vegas Strip will pale in comparison. And the vision continues to range far and wide. He still likes the prospects in some of Europe’s capitals. Vietnam appeals to him as well, he’s visited the country, and given the chance, he’ll do something fabulous in Ho Chi Minh City if the government rescinds its longstanding ban on domestic play, a prospect that’s looking increasingly likely. Seoul beckons, too, if a locals market there were similarly allowed. In his home country he particularly likesMiami. He’s been battling the Disney empire in Florida for three years over it and he’s not giving up. The US Internet gambling lobby took heart earlier this year when reports surfaced that at 80 he might consider retiring. They’ve been reeling from the multimillion-dollar lobbying and public relations