Macau casino rivalries rise to fever pitch

(source: AP September 4, 2006)

Macau casino rivalries rise to fever pitch

Competition intensifies with accusations of poaching fly across gaming establishments

By William Foreman Associated Press

A local casino tycoon accuses his new U.S. rivals of stealing his customers. The Americans call him a crybaby.Things are getting hot in Macau – which might soon depose Las Vegas as the world’s largest gambling market. And the scene will heat up more on Wednesday when American gaming mogul Stephen Wynn opens his US$1 billion casino-hotel complex in the former Portuguese enclave.The big gamble began four years ago when China broke up the casino monopoly held by the wisecracking tycoon Stanley Ho, who for 40 years controlled the market in this city on the southeastern Chinese coast.Ho’s smoky, well-worn casinos have already lost a big chunk of market share to Las Vegas gaming king Sheldon Adelson. He opened the gleaming Sands Macau in 2004 and is building the US$2 billion Venetian Macau – a mega resort hotel with casinos, shopping malls and convention space slated to open in 2007.Macau is much different from Las Vegas, where casinos make most of their money from the “mass market” – people playing slots and other games in the main gambling hall. In Macau, the big money is made from private “VIP rooms,” where high rollers from China, Japan, South Korea and other places are brought in by junket operators who provide transportation, rooms, credit and other perks.Ho, one of the area’s most powerful and colorful business leaders, has begun accusing the Sands Macau of stealing his VIP customers with chip discounts and high commissions paid to agents who bring in the high rollers.”Dozens of our VIP halls are having difficulty to maintain business. The hall operators … say they can’t go on,” he was quoted as saying last month by the South China Morning Post.Ho groused again during the past week, and – as usual – his remarks made big headlines, especially in Hong Kong, just an hour away by high-speed ferry. The tycoon accused the U.S. casinos of poaching his employees, and he said the local government has been favoring the Americans, who he warned would eventually take control of Macau. He also suggested that Beijing might want to intercede.Sands executives snapped back that Ho needed to stop whining and adjust to the post-monopoly era.”Crybabies don’t win new business,” said William Weidner, president and chief operating officer of Las Vegas Sands Corp., as he visited the firm’s properties here.”If Stanley Ho thinks it’s tough now, wait until Stephen Wynn gets in the marketplace. It’s going to be brutally competitive,” Weidner added.”We live everyday on the Las Vegas strip, where you can look out your window and see your competitor across the street and there aren’t three competitors. There are 30 competitors.”Adelson, chairman and chief executive officer of Las Vegas Sands Corp., warned Ho that if he can’t stand the heat, he should get out of the kitchen.Ho fired back that he was ready to compete.”Not only won’t I stay out of the kitchen, but I will also cook a barbecue pork rice set,” the Post on Saturday quoted him as saying.Weidner denied raising commissions, saying the Sands’ rates were just structured differently. He also said that too many middlemen got a cut of the commissions in Ho’s system.U.S. casino operators have been trying to break into the Asian market in recent years. In addition to the new Wynn Resorts Ltd. casino in Macau, Sands is building a casino resort in Singapore set to open in 2009.But Macau is clearly king of the gambling scene in Asia, rivaling Las Vegas as the world’s largest gambling market.Globalysis Ltd., a Las Vegas-based consulting firm, said this month that Macau’s expected gross gaming revenue in 2007 would rise an estimated 18 percent to US$8 billion.Last year, the Las Vegas strip raked in US$5.3 billion, according to the Center for Gaming Research at the University of Nevada, Las Vegas. Gaming revenue in the state of Nevada was US$10.7 billion in 2005, the center said.Much of the Sands Macao’s early success has been due to the way it delivers the high-quality Las Vegas gambling experience. The casino’s VIP rooms have plush carpet and glass cases stocked with Cuban cigars and bottles of brandy. The walls have large flat-panel TVs and colorful paintings of famous Chinese landscapes.But the company is betting that the revenue from mass-market gamblers will eventually overtake the money made from the high rollers in VIP rooms. This will happen because the new resorts will draw a bigger population who will visit the main gaming hall, the company says.Ho’s warning of a possible Beijing backlash also didn’t worry the Sands’ executives.”Do you really think there’s a reason for them (Beijing) to interfere? I don’t think so,” Adelson said.”They’re not treating me preferentially,” Adelson said. “The purpose for bringing in outsiders was to dilute the effects of the monopoly and increase the effects of competition.”

Date Posted: 03-Sep-2006