Adelson sees Macau ‘at or near’ bottom of gambling downturn

Sheldon Adelson attends a news conference for the opening of the St. Regis Macao Hotel

Las Vegas casino billionaire Sheldon Adelson said he expects Macau’s economy and hard-hit casino industry, in the midst of an 18-month downturn, to start recovering next year.
“I think we are either at the bottom or near the bottom and then will turn around in the near future, certainly within 2016,” Adelson, the chairman of Sands China Ltd., said at a press conference in Macau where the casino operator is opening a 400-room St. Regis hotel.
Macau’s casino industry has been on a downward spiral since mid-2014 as China’s anti-corruption campaign keeps high rollers at bay and a slowing Chinese economy hurts mass-market gambling. Operators are bracing for an expected 32 percent decline in gross gaming revenue this year before the hoped-for rebound in 2016.
Sands China shares have plunged 32 percent so far this year, against the benchmark Hang Seng Index’s 7.8 percent drop. “I do agree with him that the worst is probably behind us and we could see some moderate recovery in 2016,” said Richard Huang, an analyst at Nomura Holdings Inc. “That said, the pace of recovery is likely to be moderate as the market still faces multiple macro headwinds like decelerating growth in Chinese economy.”
Sands China, the biggest foreign operator in Macau with four casinos, plans to open its fifth, the USD2.7 billion Parisian Macao, in nine to 10 months, Adelson said. The Cotai Strip project, featuring a half-size Eiffel Tower replica, is hoping to get government approval for 250 new gambling tables, he said.
“We should have enough tables – we have asked for 450 but nobody is getting what they hope for,” said the 82-year-old tycoon. “We are hoping to get treated fairly which I’m quite confident the Macau government will do with us.”
Adelson, who has an estimated net worth of USD22 billion according to the Bloomberg Billionaires Index, added in an interview that he hopes Sands China will stand to benefit from its contributions to Macau when its 20-year gaming concession comes up for renewal after expiring in 2022.
“Right from the very beginning we’ve done exactly what the government wanted us to do – and people say we helped change the face of Macau,” Adelson said. “If that’s the case, we should be getting at least what everybody else is getting to be fair, and hopefully we get something extra.”
The key is to building a relationship based on trust with the government, said Sands China president Wilfred Wong during the same interview. The casino operator hired the industry outsider on Nov. 1, breaking a tradition of having non-Chinese executives helm its operations as it braces for stricter policies and as gambling-concession renewals loom.
“No relationship is given, no relationship is forever,” said Wong, a 15-year veteran of China’s top lawmaking body the National People’s Congress. “You just need to prove to another party that you’re doing what you promised and create the trust among each other, I think that’s the only way to cultivate relationships.” Stephanie Wong and Daniela Wei, Bloomberg