Inside Asian Gaming

INSIDE ASIAN GAMING | September 2011 12 be most happy to see the new deadline successfully met. Other bright spots this year came in July when LVS said it had appointed Ed Tracy as Chief Executive of Sands China, promoting him from his existing job as President. The CEO post had been vacant for a year since the sacking of Steve Jacobs in the summer of 2010. Michael Leven, the President and Chief Operating Officer of LVS had been acting Macau CEO during that time. Investors welcomed news of Mr Tracy’s appointment. They were also pleased it freed Mr Leven to focus on his strategic role. Soon afterwards, the company named George Tanasijevich as Chief Executive of its Marina Bay Sands (MBS) in Singapore. Mr Tanasijevich had been interim CEO of the 18-month old casino resort since the resignation of the first CEO Tom Arasi in January. The day before Mr Tanasijevich’s appointment, LVS announced its results for the second quarter of 2011. In Macau, the company achieved what it described as market-leading adjusted property EBITDA margin of 33%. It said two important factors in that margin growth were expansions of its highermarginmasstableandslotbusinesses. In the first half of this year, Sands China nearly doubled its net income compared to the equivalent period in 2010. The company reported a net income of US$540 million (HK$4.19 billion) for the six months ended 30th June, compared with US$251 million a year earlier, according to a statement to the Hong Kong Stock Exchange. Sands China also reported a 50.1% increase in net revenues from its convention, retail and ferry businesses in the first half of 2011—despite the fact that market-wide the number of conventions staged in Macau fell 29% in the second quarter, and the average duration of meetings and conventions in Macau as a whole fell from 2.3 days to 2.1 days. InSingapore,MarinaBaySandsproduced a record US$405.4 million of adjusted property EBITDA during the quarter and an EBITDA margin of 55.0%. Currently, MBS looks on course to pip its Singapore market rival, Genting’s ResortsWorld Sentosa, to top spot in gross gaming revenue during 2011. There was more good news in early August. LVS said in a filing to the New York Stock Exchange it had signedup thehoteliers Hilton Worldwide and InterContinental Hotels Group for the right to have their respective Conrad and Holiday Inn brands at Sands Cotai Central. The brands were replacements for those of Shangri-La Asia. The latter company chose not to renew an agreement with LVS for Cotai once the agreement had expired following delays to the project. The good news kept on coming. In late August, the Nevada Supreme Court ordered a Clark County judge to reconsider whether Sands China Ltd—a company based in Macau—could really be sued in Nevada over allegations relating to Macau. The case has been brought by Steve Jacobs, who claims he was wrongfully dismissed as CEO of Sands China last year. He said it was because he refused to go along with demands that he engage in improper activity, including organising private investigations of members of the Macau government. LVS and Sands China strongly deny the allegations. And Sands China has complained that because of Macau’s strict privacy laws, the process of gathering evidence in Macau on behalf of the court in Nevada and then sharing it between applicant and defendant—known technically as ‘discovery’—will be time- consuming and costly. The Las Vegas Sun newspaper reported, however, that the ruling in the higher Nevada court is not the end of the matter. The newspaper says the jurisdictional tussle will be subject to a hearing all of its own that could take months. And that sting in the tail is a reminder of another important issue. There are some signs that LVS has not yet recovered all of the community goodwill it lost in Macau following Mr Jacobs’ allegations. That’s despite the strong denials over the claims then and later by the company. When Mr Adelson received his ‘Visionary Award’ from Frank Fahrenkopf, the President and CEO of the American Gaming Association (AGA), during the G2E Asia conference at The Venetian Macao in June, the dining room was full—but not many of the Macau industry’s ethnic Chinese leaders were in attendance. That contrasted markedly with the reception Dr Stanley Ho got the previous year when he received his ‘Lifetime Achievement’ award from the AGA at G2E. Time is a healer and the Chinese are known for thinking in terms of decades rather than quarter to quarter. But with Macau’s current gaming concessions expiring in 2022 and open to redemption by the Macau government—subject to compensation to the operators—from as early as 2017, Mr Adelson, his company and his investors will be happy if 2011 proves to have marked a permanent upturn in LVS’s Macau fortunes both on the gaming floors and away from them. Asian Gaming 50 – 2011