Inside Asian Gaming

inside asian gaming August 2015 18 Feature In Focus REMOTE CONTROL US casino operators also bring extraterritorial scrutiny from regulators in their American jurisdictions, sometimes producing unwelcome publicity for Macau. New Jersey regulators branded Pansy Ho an “unsuitable” partner and demanded MGM end their relationship or exit New Jersey. MGM couldn’t sell its 50% stake in Atlantic City’s Borgata Hotel, Casino and Spa—Boyd Gaming owns the other half— and last year New Jersey ruled the reduction in Ms Ho’s MGM China stake was sufficient to allow MGM to retain Borgata. Wynn and Sands also have potential to produce embarrassing headlines or worse from their Macau conduct. Revelations growing out of former Sands China CEO Steve Jacobs’ wrongful termination lawsuit against LVS and Wynn Resort’s fight with its deposed vice chairman and dispossessed largest shareholder, Japanese pachinko magnate Kazuo Okada, have prompted US investigations into their Macau operations that could result in actions against the companies. If US authorities find LVS or Wynn committed serious wrongdoing related to Macau, “That would be to the delight of the Macau government,” a gaming executive who asked not to identified says. “Any [adverse] regulatory finding would give them an excuse to remove their concession.” Wynn built Macau’s most-requested resort for high rollers but arguably made the least effort among the US operators to create non-gaming attractions. Sands China is a different story. “Sands built up Cotai and delivered what the government wanted. It wouldn’t be the same Macau without them,” the executive says. “They’ve also been the most antagonistic.” LVS founder Sheldon Adelson has clashed with Macau authorities over many issues. He accused Mr Chui of reneging on a deal Sands China made with his predecessor Edmund Ho to sell apartments at the Four Seasons complex adjacent to its flagship Venetian Macao. Macau struck back with a police raid netting prostitutes at Venetian while Mr Adelson was in town and removing Sands China’s development rights for two coveted Cotai plots. Some still hold a grudge because Sands stopped work on Sands Cotai Central in 2008, when Macau faced its only economic hard times in the first decade of gaming liberalization—and LVS teetered on the brink of bankruptcy—while continuing to build Marina Bay Sands in Singapore. But a more balanced view recognizes Mr Adelson and his team spearheaded Macau’s extraordinary boom in the decade following the 2004 opening of Sands Macao. Despite dustups, Mr Chui is said to personally like Mr Adelson, and there is no doubt that Sands China has provided the most non- gaming hardware. Sands pioneered Cotai, in less than a decade turning it from unwanted swampland into a miniature Las Vegas Strip that’s now the center of Macau’s gaming industry. Venetian Macao is a must-see attraction that, beyond the kitsch, includes the 15,000-seat Cotai Arena, 1,800-seat Venetian Theatre custom built for a failed Cirque du Soleil show and now used for concerts and musicals, 1.2 million square feet of convention space and a 1.6 million square foot shopping mall. Subsequent Sands properties in Cotai, Four Seasons and Sands Cotai Central, added more retail and convention space, and the Parisian, expected to open next year, will have a half- scale replica of the Eiffel Tower. Both Sands and Wynn remain very much products of their aging, visionary founders—Steve Wynn is 73, and Mr Adelson, who earlier this year took the CEO role at Sands China, is 82—and succession plans at both companies are unknown. “Once they’re not there, the companies will change,” the gaming executive believes. “That has to be [viewed as] a risk.” It’s impossible to say whether Macau would consider Sands without Mr Adelson or Wynn without Mr Wynn as more or less appealing concessionaires. Sources emphasize that, whatever happens between now and concession expiry dates, the overwhelming likelihood is for all six current operators to be granted new concessions. “Macau is generally conservative and prudent,” Mr Godinho, a longtime law professor at University of Macau, notes. “History shows that the transitions from one concession to another are always periods of unpredictable change, moments in which Macau gambles its future.” Both Sands and Wynn remain very much products of their aging, visionary founders— Steve Wynn is 73, and Mr Adelson, who earlier this year took the CEO role at Sands China, is 82—and succession plans at both companies are unknown. It’s impossible to say whether Macau would consider Sands without Mr Adelson or Wynn without Mr Wynn as more or less appealing concessionaires.