LARGE PUBLICLY TRADED GAMING COMPANIES: LVS

SEVENTEENTH LECTUREOctober 23, 2012

William R. Eadington, Ph.D.Professor of Economics, College of Business

Director, Institute for the Study of Gambling and Commercial GamingUniversity of Nevada, Reno

www.unr.edu/gaming

LAS VEGAS SANDS• Founded by Sheldon Adelson after the $800 m sale of Comdex (1987

or so)• Built the Sands Convention Center• Demolished the Sands and built the Venetian Las Vegas• Won a concession in Macau in partnership with Galaxy• Opened the Sands Macau (2004) and then the Venetian Macau (2007)• Opened the Pallazo in 2007• Major developments and plans for the Cotai Strip in Macau; near

bankruptcy in 2009• Opened Sands Bethlehem (PA) in 2009• Won a Singapore license in 2006; opened Marina Bay Sands in 2010• Opened the Four Seasons (Plaza Macau) in 2010 and the Cotai Center

Strip in 2012• Major plans for more Macau construction

SANDS CONVENTION CENTER

LAS VEGAS SANDS IN ASIA• Unusual process led to LVS getting a concession in Macau

(2002)– Originally partnered with Taiwan firm; unacceptable– Not a publicly traded corporation– Chinese broker who later sued; awarded about $50 m

• First to open an American-style Macau casino: Sands Macau in 2004– Payback period in less than one year

• Built the Venetian Macau, which opened in August 2007– 2nd largest building under one roof in the world

• Financial difficulties in 2008-2009– Share price from $150 to under $2

LAS VEGAS SANDS: OPENED 12-14-04 AT 53; CLOSED 3-6-09 AT 1.77; MAXIMUM ACHIEVED WAS 10-8-07 at 138.25

Loss of value from Maximum: 98.7%

THE SANDS MACAU

INTERIOR OF THE SANDS

EARLY MODEL OF COTAI STRIP

THE VENETIAN MACAU

VENETIAN MACAU

ENTRANCE

THE CASINO (UNDER CONSTRUCTION)

PALAZZO LAS VEGAS

WINNING THE BID IN SINGAPORE

• Were not the favorites (behind Harrah’s and MGM, both in partnership with Singapore Sovereign Fund land companies)

• Based on their initial analysis, they overbid the CAPEX at about U.S.$5 b

• Won the bid in May 2006; opened the facility in April 2010

• Highest grossing and most profitable casino in the world by 2011

CONSTRAINTS IMPOSED BY SINGAPORE GOVERNMENT

• S$100 entrance fee for Singapore residents– Annual “membership” of S$2,000 per year

• Exclusions if you are been through bankruptcy or convicted of a felony

• $1 billion land lease for the duration of the license (25 years)

• Strict licensing standards• Severe restrictions on local marketing– Prohibitions against shuttle busses

MARINA BAY SANDS SINGAPORE

SKYPARK AT THE MARINA BAY SANDS

INFINITY POOL AT SKYPARK, MARINA BAY SANDS

RECENT LVS SCANDALS AND OTHER ACTIVITIES

• 2011 Inductee into the AGA Gaming Hall of Fame• Claimed he would contribute $100 m to Romney to

defeat Obama in this election cycle• Wrongful Termination lawsuit brought by Steven

Jacobs, 2009 => Still in Las Vegas court• Exposés published by Reuters, Wall Street Journal, New

York Times, Pro Publica (2009-2012)– Allegations: Violation of Foreign Corrupt Practices Act;

corrupting public officials; dealing with junket operators who are not licensable; illegal transfers of money from Macau to Las Vegas

2011 GAMING HALL OF FAME INDUCTEES: BLUE MAN GROUP, CHARLIE PALMER,

SHELDON ADELSON, BILL EADINGTON