Sheldon Adelson played a crucial role in Macau’s emergence as the epicentre of the gaming world. But his death comes at a time when the city’s casinos are struggling with a collapse in revenues and huge uncertainty on a licencing decision that will shape the sector for decades.
Any ranking of Macau’s most influential people must begin with Stanley Ho, a dominant figure in the city’s casino trade. But close behind him is Sheldon Adelson, another gambling kingpin, who dragged Macau’s casinos into the modern era when Ho lost his gaming monopoly in 2002.
Ho died in May 2020 aged 98 after a long illness. Adelson threw in his chips this week at 87 years of age. He leaves the scene at a time of unprecedented uncertainty in Macau gaming, especially for the casino brands that are US-controlled.
The founder of gaming giant Las Vegas Sands, Adelson was instrumental in the explosive growth in Macau gaming since 2004, when he opened the first of his casinos in the city. It was a transformational moment for the enclave and the millions of Chinese that would flock there in the hope of making their fortunes at their favourite game, baccarat.
Of course, it was a spectacular success for Adelson too, who recouped the $250 million in construction costs inside six months.
Soon afterwards he played the role of pioneer once more, this time as the promoter of the Cotai Strip, a glittering parade of hotels and gambling halls that rose up from swampy soil formerly regarded as wasteland.
Another vast casino there (The Venetian) set the tone again and Adelson’s company stayed so focused on its future in Macau that it was even reported to be considering a sale of its Las Vegas assets last year.
All of this for a man who sounded disgusted when he first laid eyes on the city that would make him one of the richest men in the world. “Prostitution infested, crime infested, triad infested,” he later recalled. “Everything that you don’t want a gaming destination to be… was going on in Macau.”
American entrepreneurs are unlikely to have the same chance to shape the agenda as he did, however, with fears that political tensions between Beijing and Washington could see some of Macau’s biggest casinos set for the chop, because of their American ownership. The sentiment has weighed on the share prices of all three US casino firms (Las Vegas Sands, Wynn Resorts and MGM), which have been trading at discounts to local rivals on political risk concerns.
The same sense of uncertainty is a complicating factor for gaming executives when the industry is on the verge of a new tendering process for licences that have allowed six operators to run casinos in the city.
With the review in mind, Snow Lake, an Asian-based investor, has been urging MGM to sell a fifth of its business to a partner from China’s internet, travel or leisure sectors in a bid to bring more Chinese money onto its shareholding register.
Another part of the pitch is that new investors from outside the sector would boost MGM’s non-gaming expertise, fuelling Macau’s bid to broaden its allure to a fuller range of attractions. New customers will certainly be in demand when the worst of the pandemic subsides, after a 79% slump in gaming revenues last year, to the lowest levels since Adelson first arrived.
A further challenge for the casino bosses is how to respond to the political pressures to reduce their reliance on VIP players at high-stakes tables. The Chinese government has tried to clamp down on much of the high-roller bets, worried about capital flight and illicit sources of funding for some of the players. Most of these gamblers are brought to Macau by specialised agencies called junkets, which find themselves at risk of legislation from the National People’s Congress that makes it a crime to solicit local players to gamble overseas.
The Macau government will spend most of this year revising the territory’s gaming law before formally opening the process that awards the new casino concessions by next June. In the meantime there is talk of an extension of the existing licences by up to three years to 2025. That would be better news for casino bosses from the US, giving them a chance to recover some of their recent losses.