Adelson Lost $10 Billion, But He’s Still on Top of the Gaming Industry
You Know You’ve Made It
It’s the end of the year, so it is time for U.S. Legal Poker Sites to compile its list of the Big Winners and Losers of the World Gambling Industry in 2014. Because we primarily cover the US market, this is going to be an America-centric list. Global developments have been considered, though.
Amaya Gaming: Winner
Amaya Gaming is a big winner in 2014, even if it never succeeds in having PokerStars returned to prominence in the United States. Even if that never happens, Amaya Gaming controls the world’s unquestioned #1 online poker website, after having purchased PokerStars and FullTilt Poker in August. And if the Canadian-based gaming software company succeeds in having PokerStars restored to the US market–as CEO David Baazov has predicted–then Amaya Gaming comes out of the year as a huge winner.
Caesars Entertainment: Loser
Caesars Entertainment’s casinos continue to make money in most locations around the country. It’s not enough, though. Caesars is saddled with roughly $23 billion of debt, due to 2008 leveraged buyout of the company. That expensive buyout was months before the real estate and banking industries had their financial collapse. The calculations of the new ownership group were thrown off completely, and the company has never recovered.
Caesars continues to limp along, but it appears headed towards an eventual bankruptcy. It closed the Showboat Casino in Atlantic City, despite making money from the venture. Gary Loveman also closed the Grand Tunica Casino in Mississippi. Both of these are signs of a company in real trouble. Caesars, which is still the largest single owner of casinos in the United States, also missed out in the bidding process for casinos in Massachusetts and New York. Luckily, Caesars avoided the troubles that its three major domestic rivals did, because it isn’t vested in Macau.
Las Vegas Sands Corporation: Loser
It’s hard to place the Las Vegas Sands Corporation on the list of losers, especially when the gaming company remains the most profitable. But when the revenues for its main moneymaker are down nearly 50%–and it’s a huge surprise–that has to be a losing year for the company.
Everybody knows the story…ten years ago, Las Vegas Sands Corp was a second-tier Las Vegas Strip gaming company. Then Sheldon Adelson took a chance on building a casino in a swamp in Macau, in the year’s just after Portugal turned over the city to mainland China. Macau didn’t even have air service from China at the time.
Ten years later, Macua has improved its infrastructure, while millions of Chinese gamblers flock to its casinos every year. The Asian high rollers gamble huge amounts, while the new Chinese middle class visits in massive numbers. Macau makes seven times the revenues of Las Vegas these days, and the Venetian Macau and Sands Macau were prime beneficiaries of those revenues.
But the Chinese premier is cracking down on corruption in China, and Macau started feeling the weight of the crackdown in the summer of 2014. Over the past six months, revenues have dropped off 50%. That’s the main revenue source for LVS, Wynn Resorts, and MGM Resorts these days, so it’s a bad blow for those companies. Las Vegas Sands stock is down 30%, so that’s a loser of a year.
Wynn Resorts: Winner
Steve Wynn’s gaming company has felt the sting of the Fall of Macau, too. Wynn Resorts is heavily invested in the Chinese gaming capital’s future. But Steve Wynn continues to focus on the American gaming market, too. In October, he won a lucrative license to place a casino in Everett, just north of Boston. All those Bostonian gamblers who flocked to the Mohegan Sun and Foxwoods these past 20 years will now stay home and make Steve Wynn richer.
MGM Resorts: Winner
MGM Resorts’s 2014 is similar to the results for Wynn Resorts. MGM Resorts saw its Macau revenues drop. It also won a license to open a casino in Western Massachusetts. While the Springfield casino isn’t going to be as lucrative as the Wynn Boston Casino, it’s still a nice way to keep the domestic gaming ventures expanding. 2014 has shown that
it’s still better to gamble on countries with predictable leadership, because authoritarian regimes can take a 90-degree turn at any minute. While the USA has a patchwork of gaming laws, the trend is toward regulation and the Massachusetts casino should be a nice addition for MGM Resorts.
Sheldon Adelson: Winner
Here’s where things get a little complicated. Sheldon Adelson‘s gaming company (LVS) is considered a loser this year. Adelson is a winner. Adelson continues to rake in huge sums of cash. Though he’s lost $10 billion in 2014, he still has $27 billion to his credit, making him the 23rd-richest man in the world. That’s sort of like hearing that the Queen of England had a bad year when her favorite palace burned to the ground. When your “favorite” palace burning is the worst thing that happened in a year, you’re still doing pretty well.
This grade is more associated with Adelson’s progress in his campaign against online gambling. At the start of 2014, Sheldon Adelson was seen as a quixotic laughingstock on the issue. New Jersey, Nevada, and Delaware were experimenting with online gambling and everyone knew it would be a huge success. When those results became known, the 10 other states considering it would pass laws and Adelson would be swept aside by events.
The big revenues didn’t materialize, though. More than Adelson’s lobbying, that has kept states like California, Pennsylvania, and New York from passing Internet gambling regulations. Meanwhile, the top presidential candidates in the GOP made pilgrimages to Las Vegas to fete Sheldon Adelson. He got two U.S. Congressmen (Sen. Lindsey Graham and Rep. Jason Chaffetz) to introduce Restore America’s Wire Act to the Congress. RAWA would ban all online gambling in all 50 states.
And the Republican Party won control of the U.S. Senate, which makes the passage of RAWA more likely. While it’s still a longshot, the GOP could pass Restore America’s Wire Act and put a bill on President Obama’s desk. The likeliest scenario would have the bill attached to a more momentous or important bill. Who can say what that might be, but Obama might find it impossible to veto such a bill, for political reasons. Sheldon Adelson’s cause still has long odds, but it could happen. He’s closer now than he was a year ago, so he’s won ground in 2014.
Atlantic City: Loser
The biggest loser of 2014 has to be Atlantic City. The casino gambling destination began the year with 12 casinos in operation. It ends the year with only 8, with one more casino in bankruptcy and on the verge of closing. Only Carl Icahn’s $20 million influx of cash has kept the doors open at the Trump Taj Mahal…for now.
Atlantic City has been the #1 victim of market saturation in the northwest. Pennsylvania, Delaware, and New York have expanded their domestic casino gambling industries in the last 10 years. Combine that with the Global Recession and Atlantic City, which derives about 70% of its tax base from casino taxes, is facing major economic crisis. Just the other day, the state of New Jersey loaned Atlantic City $40 million, because it would have been hard for Don Guardian to have borrowed on the capital markets.
That’s a big loser.
