Inside Asian Gaming

September 2012 | INSIDE ASIAN GAMING 7 Asian Gaming 50 – 2012 It’s not merely casinos that Sheldon Adelson has built over the last decade, it’s more even than a multinational resort business—it’s an “economic machine,” as one of his top executives describes it. As for the gruff, diminutive maverick at its controls, unabashed capitalist, implacable foe of trade unions, militant Zionist, a billionaire 25 times over, iconoclast to the end, his body’s been slowed by age (he turned 79 in August) and infirmity, but the will that centered an empire on the pillars of the three most lucrative gambling markets in the world, two of which he largely created, it’s indomitable as ever. He’s got people on two continents suing his companies for tens of millions of dollars, claiming they were cheated or misused. The US Justice Department, the FBI, the US Securities & Exchange Commission and the Nevada Gaming Control Board are investigating his business dealings in China and Las Vegas amid allegations rife with tales of bribery, corruption, money- laundering, blackmail and prostitution. No less a voice than The New York Times ’ has basically called for his banishment from the US political process. Even Macau’s normally quiescent authorities have gotten into the act, looking into possible violations of its anti-privacy laws. But if Mr Adelson is feeling encircled these days, it’s not like he hasn’t felt that way before. Born in the Great Depression, one of four children of an immigrant taxi driver and ad salesman, he has known privation. 2 Sheldon Adelson Chairman and CEO Las Vegas Sands Corp As he remarked after having watched 90% of his fortune evaporate in the 2008 global financial crisis—“So I lost $25 billion. I started out with zero.” In the relative calm of more recent times, he has maintained that to the “entrepreneur”there is“no such thing as fear. Concern, yes, Fear, no.” And he has battled back from the corporate ruin that confronted him four years ago to rank eighth on Forbes ’ 2012 list of the wealthiest Americans, 14th in the world, the head of a company forecast to book more than US$12 billion in revenues this year and commanding an enterprise value north of $40 billion. His drive still wears out men half his age. He’s got an eye on Vietnam and South Korea. He’s kicking tires in New York City and Toronto. Officials in Japan are soliciting his thoughts on resort development there. In Spain, his multibillion-dollar EuroVegas scheme has Madrid and Barcelona competing for his favors as they’ve never fought on the football pitch. He’s finally a second in command he trusts, and stable, capable management in place in his core Asian markets. The global growth strategy has been fine-tuned. A minimum of 25-35% of new developments are to be funded with equity, with 65- 75% of financing in place before any earth gets moved. No less than a 20% return on invested capital is acceptable. As for the “machine,” it cranks on like a force of nature, fueled by its own massive asset base, 90% of its pre-tax earnings generated by its four Macau casinos—the city’s largest in terms of hotel rooms and square footage and the market leader in high-margin mass play—and Marina Bay Sands in Singapore, the most expensive and arguably the most profitable gambling resort in the world. Nor does it appear that his legal troubles have cost him a beat in either place. But then, LVS has invested more than US$9 billion in Macau, and its $5 billion Sands China subsidiary, a Hang Seng blue chip less than three years after listing, straddles the territory like a state within a state, entertaining more than 100,000 tourists a day, employing more than 20,000 people, 80% of them locals, and generating one-fifth of the city’s gaming taxes. He has vowed to bring down the president of the United States, whatever it costs, andsureenough, therewas Republican Mitt Romney at the end of July, millionaire Mormon, seated next to the Jewish casino magnate at a fundraiser in Jerusalem, and early in August, there was Congressman Paul Ryan, who didn’t wait a week after being named Romney’s running mate to make the pilgrimage to Las Vegas to render fealty to the cabdriver’s son. What does the man himself make of it all? It would be interesting to know. “A billion here, a billion there,” as he likes to quip, “pretty soon you’re talking about real money.” Maybe therein lies the answer. Photo courtesy Las Vegas Sands Corp himself conveys and which stands as a key component of GEG’s success in a part of the world where personal relationships and social and familial networks are paramount in facilitating business and other dealings. “Galaxy and I came into the industry from very humble beginnings,” he says. “I had a clean slate. So I came with Asian heart, I came here to learn, respect other people and see what I can do to integrate all the lessons I learnt into my own creation.” It’s why people in the region—including players fromChina, Hong Kong and beyond, the junkets, the residents and government of Macau and the central government in Beijing—like Mr Lui and GEG and want to see them do well. And partly why when China’s 2012 Olympic gold medalists were on a two-night stop in Macau last month, they opted to book their stay as paying guests at Galaxy Macau. Most important, Mr Lui has the company well-positioned for future development with the biggest land bank on Cotai at 2 million square meters. It is currently building Phase 2 of Galaxy Macau—scheduled for completion in mid-2015—which looks set to become the first new property of Cotai’s much anticipated “second wave” of resort development. If GEG continues developing its mass- market business at its current pace, following the Phase 2 opening the company stands a good chance of becoming, by every measure, the No. 1 operator in the largest casino market in the world.