As Las Vegas Sands Corp. eyes Macau and Singapore for future growth, an expert warned that this move will likely be entangled with economic and political risks.
The upscale resort and casino company announced on March 3 that it has reached an agreement to sell its Las Vegas real property and operations, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center, for an aggregate sale price of approximately $6.25 billion. Meanwhile, the company plans to continue its business in Asia.
The move marks the company’s growing interest in the Asian market.
“Asia remains the backbone of this company and our developments in Macao and Singapore are the center of our attention. We will always look for ways to reinvest in our properties and those communities,” Las Vegas Sands Chairman and Chief Executive Officer Robert Goldstein said in a statement.
Las Vegas Sands is spending $5.5 billion to renovate and grow its casino holdings in Macau and Singapore, The Nevada Independent reported.
However, an expert in China’s economy and politics warned that the risk in the Asia market is piling up for Las Vegas Sands.
Frank Tian Xie, John M. Olin Palmetto Chair Professor in Business at the University of South Carolina Aiken, told The Epoch Times that the risks are from two different aspects: economic and political.
Xie said Sands’ investment in Macau obviously aims at attracting people from China. In the past, a lot of Chinese Communist Party (CCP) officials went to Macau to gamble to either enjoy themselves or to launder money.
However, Xi Jinping’s vigorous “anti-corruption campaigns” since 2012 have largely curbed officials from going to Macau, or other parts of the world.
In the meantime, the Chinese economy is not doing well, foreign exchange reserves are tight, so there is not much money to take outside of the country.
“Sands has underestimated the economic risk,” Xie said.
The other issue is political risk.
Xie said regardless of who helped Sands to get the gambling license before, they are all a liability now. Some of the political figures with whom the Sands had established relations before may have belonged to the Jiang Zemin faction.
Jiang is the former leader of the CCP who heads a faction that has struggled with Xi Jinping for control of the Party.
“Furthermore, the chances of a total collapse of the CCP’s political system and economy are increasing, and Sands has under-assessed this risk too,” Xie said.
Since Sands was granted a gambling license in Macau in 2002 and became the first foreign gambling group to be licensed there, the scale of Sands’ investment in China (Macau) has grown by factors of tens.
The Epoch Times reached out to Las Vegas Sands for comment.
Macau’s Gambling License Renewal: a CCP Bargaining Chip?
Sands is facing some uncertainties after it decided to completely shift its focus to China. The biggest one is whether Sands’ gambling license in Macau can be renewed after it expires in June 2022.
The Macau government has not yet openly disclosed its intention as to whether it will renew Sands’ license. However, as the tensions between the United States and China continue, there are concerns that as Sands is a U.S. company, its license renewal could be affected.
As early as the end of 2018, Hong Kong’s Oriental Daily reported that while there had been rumors that the government of Macau might initiate an open bid for gambling licenses, details of the renewal of current licenses were not disclosed, and the reason might be that the Macau authorities were waiting for instructions from Beijing.
The media outlet quoted Macau current affairs commentator So Man-yan as saying, “Apparently, one of the main reasons for the Macau government’s delay in announcing the license renewal arrangement is that it is waiting for instructions from the central government.”
So said, three of the six licensed gaming companies (including Sands’ Venetian Macao) are U.S. companies, and this could be an important bargaining chip for the Chinese Communist authorities in the U.S.-China trade war.
Katherine Jiang, a Hong Kong-based financial and investment analyst, told the Epoch Times that in addition to the uncertainty surrounding the extension of Macau’s gambling license, Sands’ growing investment in China will make it hard for it to pull out, and the “bet” is very risky.
Hoffman Ho Man, the Deputy Chairman of Success Universe Group Limited, told Headline Daily that the Sands’s gambling license renewal will likely be affected by the U.S.-China tension and the Macau government may intend to award licenses to Chinese companies or change the rule of license renewal to benefit some local or Chinese businesses.
Old Connection With Beijing Facing New Tests
Company profiles show Sands’ properties in Macau include Sands Macao, the Venetian Macao, the Plaza Macao, the Parisian Macao, and the Londoner Macao. The company also owns Cotai Expo, one of the largest convention centers in Asia, as well as Cotai Arena, the largest performance venue in Macau.
The company invested $265 million in the Sands Macau Hotel in May 2004 and opened the $2.4-billion Venetian Macau in August 2007.
Various lawsuits indicated that Las Vegas Sands gained their gambling license in Macau through intensive engagement with CCP officials.
In 2004, Hong Kong businessman Richard Suen who brokered the deal between Sands and the CCP, sued Sands’s late founder Sheldon Adelson in the United States. Suen alleged that he arranged Adelson’s meetings with Qian Qichen, former Chinese vice premier and then-director of the Hong Kong and Macau Affairs Office, and Liu Qi, president of the Beijing Olympic Committee and Secretary of the CCP Beijing Municipal Committee in 2000.
Edmund Ho, then-governor of Macau, issued gambling licenses afterward to Sands when Macau’s three gambling licenses were split into six.
The case was settled in March 2019 after 14 years of legal battle. Terms of the settlement weren’t announced.
However, the old connection established by Sands then will likely face new tests as Xi Jinping became the leader in China in 2012.
After taking office, Xi sought to consolidate his power in the party to avoid being eliminated in factional politics. In Xi’s anti-corruption campaign, many high-ranking officials associated with the Jiang Zemin faction have been arrested, The Epoch Times reported.
It’s unclear if Sands has a strong tie with the Xi faction.
Jennifer Bateman contributed to this report.