Sheldon Adelson's Death Adds to Uncertainty in Macao's Casino Landscape

Wednesday 13th January 2021

The death of casino mogul Sheldon Adelson may bring uncertainties to the gambling market future of Macao as authorities of the world's biggest casino hub mull an industry overhaul.

Adelson, founder of the world's largest casino company, Las Vegas Sands Corp., died Monday night from complications related to non-Hodgkin's lymphoma, the company said Tuesday. He was 87.

With a fortune of $33.5 billion, Adelson was listed by Forbes in September as the 28th-richest person in the world. His wealth was derived mostly from his majority stake in Las Vegas Sands. The company, with revenue of $13.7 billion in 2019, operates a convention center and casinos in Las Vegas along with gambling resorts in Macao and Singapore. Adelson, who was chairman and chief executive officer, controlled more than half of the company's shares.

A Boston cabdriver's son, Adelson made his first fortune in trade shows, founding what would become the computer industry's largest event, Comdex, and selling it to Japan's SoftBank Group Corp. for $800 million in 1995. He plowed the profits into casinos, first in Las Vegas and then in Asia where he helped turn the former Portuguese colony of Macao into the world's biggest gambling market.

Sands China Ltd., the Macao-based subsidiary of Las Vegas Sands, is now the largest casino and recreation complex operator in the special administrative region after nearly two decades of business operations. Adelson owned 70% of Sands China, according to the company's 2020 interim financial report.

Adelson first tapped into the casino business in 1989 when he and partners bought the former Rat Pack hangout, the Sands Hotel and Casino in Las Vegas. A decade later, he demolished the Sands and opened the $1.5 billion Venetian hotel on the site, which became one of the most famous landmarks in the city.

Following the 1999 handover of the former colony to China, Adelson brought his casino business to Macao, the only region in China where gambling is legal, and broke into a market that had been closely controlled by the Macao casino tycoon Stanley Ho for nearly four decades.

In 2002, Adelson won one of the six casino operating concessions issued by the Macao government. The rest of the licenses are in the hands of Hong Kong's Galaxy Entertainment Group, U.S. developer Wynn Resorts, Ho's SJM Holdings Ltd. and other companies controlled by Ho family members.

In May 2004, Adelson opened Sands Macao, the city's first Las Vegas-style casino. He recouped his construction cost in a matter of months and wound up with five casinos there.

Entering Macau was Adelson's most successful wager. In 2019, Sands China reported $8.8 billion of revenue with $2 billion of net profit. The Macao business contributed more than 64% of Las Vegas Sands revenue that year, according to a company financial report.

"This is the best bet I've ever made in my life -- the best. It's a no-risk, no-brainer bet," Adelson once said of his investment in Macao.

Macao's casino landscape now faces a potential restructuring that may affect the current six licensed casino operators. In November, Macao's Chief Executive Ho Iat-Seng announced a plan to revise the region's Gambling Law in 2021. After the revision, Macao will hold a new tender for the casino operating licenses, which are set to expire in June 2022.

As the law revision plan was delayed by the pandemic, concerns have mounted that escalating tensions between China and the United States might affect American companies' chances of winning the tender. Adelson's death may just add more uncertainties.

Macao casinos suffered their worst year on record in 2020 amid the Covid-19 pandemic. Gross gaming revenue fell 66% to 7.82 billion patacas ($979 million) in December from a year earlier, according to data from the Gaming Inspection & Coordination Bureau. Full-year revenue fell 79% to 60.4 billion patacas.

Still, hopes remain that the world's largest gambling hub will rebound in 2021 as the pandemic wanes and the mainland relaxes travel restrictions.

Adelson used his wealth to become a force in conservative U.S. politics. As a counter to political giving to progressive candidates by fellow billionaire George Soros, he funneled almost $30 million to favored candidates in the 2008 U.S. elections and spent $100 million backing Republican hopefuls during the 2012 presidential campaign, including nominee Mitt Romney.

Adelson stayed out of the contentious 2016 Republican primaries but spent $20 million late in the race backing Donald Trump. Overall, Adelson and his wife contributed $218 million to Republican candidates and groups in 2020, including more than $90 million to groups backing Trump, according to the Center for Responsive Politics, making them the largest individual political donors in the country.

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