Sands China Sees Macau Pick Up, Says No Illegal Activity
Sands China Ltd. (1928), the Asian unit of Sheldon Adelson’s U.S. casino operator, expects growth to pick up next year in Macau and said it has followed regulations in its home territory and Las Vegas.
More hotel rooms and transportation to Macau will aid growth in the world’s largest gambling hub next year, Sands China’s Chief Executive Officer Edward Tracy said in an interview in Hong Kong yesterday. The company, which is being investigated by the Macau government in connection with data transfers to the U.S., doesn’t engage in any “crimes or any illegal activities,” he said.
Sands China is facing weaker growth in the former Portuguese colony this year as China’s economy slows and high- stake gamblers cut spending. The company and its U.S. parent Las Vegas Sands Corp. (LVS) are also under greater scrutiny amid the Macau investigation and probes by U.S. regulators.
“We not only abided by the rules in Macau, we also abided by the rules in Las Vegas,” Tracy said, while declining to comment on specific investigations.
Sands China shares closed up 2.2 percent at HK$27.70 at the 4 p.m. close in Hong Kong. The benchmark Hang Seng Index gained 0.07 percent.
The company’s Venetian Macau Ltd. subsidiary is being investigated by the Macau government in connection with the transfer of data to the U.S. Steven Jacobs, the former Sands China chief executive officer who is suing the company, has in filings said that a large amount of evidence in his case has been transported from Macau to the U.S.
The company is “cautiously optimistic” about revenue growth this year, Tracy said. Macau’s gambling revenue rose 1.5 percent to 24.6 billion patacas ($3.08 billion) in July, the slowest pace since June 2009, on easing demand and the effects of a typhoon. The casino operator expects to add about 200 more gambling tables next year, when growth is likely to pick up.
“Macau will have new supply, new hotel rooms, and new facilities,” Tracy said. “It will keep growing.”
Other casino operators are predicting a similar pick up in Macau. Galaxy Entertainment Group Ltd. (27)’s Chief Financial Officer Robert Drake in an interview today said the mass market will grow 25 percent to 30 percent in 2013, higher than the “high- teens growth” expected this year. He projected 8 percent to 15 percent growth for the VIP, or high-stakes gambling, industry next year.
Sands is interested in building a resort in Taipei that would be the size of its Venetian Macau gambling center, if it can get government permission, Tracy said. Casinos aren’t allowed in Taiwan, only on offshore islands. Taiwan legalized casinos on its outlying islands in January 2009, allowing Kinmen, Matsu and Penghu to open casinos pending referendum approval.
“We like the demographics in Taipei, we think there’s enough population to support an integrated resort,” Tracy said. “We’re not looking at any outlying islands.”
The Macau government’s Office For Personal Data Protection confirmed via e-mail this month that it has started an investigation into whether the Venetian Macau breached local rules.
Jacobs’ filings have said that among missing documents are e-mails outlining Sands’s strategy of allowing prostitutes in casinos and its hiring of a casino attorney who also represents the Macau government. Las Vegas Sands responded in a July filing that Jacobs’s claims regarding it having a “prostitution strategy” were reckless, irrelevant and false.
Las Vegas Sands in 2011 received a subpoena from the Securities and Exchange Commission requesting the company produce documents relating to its compliance with the Foreign Corrupt Practices Act. The company has said the Department of Justice was conducting a similar investigation.
The subpoena may also have emanated from allegations contained in the Jacobs lawsuit, Las Vegas Sands has said in corporate filings.
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