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4-Traders Homepage  >  Equities  >  Nyse  >  Las Vegas Sands Corp.    LVS

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Las Vegas Sands : The Hunt for the Mysterious Big Winner at Las Vegas Mogul's New China Casino

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03/03/2017 | 11:45am CET
By Ese Erheriene 

A mysterious gambler whose winning streak was blamed by Las Vegas Sands Corp. for denting profit at its newest property in Macau is proving elusive.

Sands earlier this year said its $2.9 billion Parisian casino--fronted by a half-size Eiffel Tower replica--had made far less money per mass-market gambling table than anticipated.

"One particular customer, she wins every day and she's doing very well and she affected the numbers," Sands Chief Operating Officer Robert Goldstein said on a January call with U.S. investors. Mr. Goldstein didn't provide more specifics about the customer or disclose the size of her winnings.

But on two recent visits to the Parisian, about three dozen managers, security guards, dealers, cashiers and gamblers interviewed by The Wall Street Journal said they hadn't seen or heard of the lucky gambler beyond media reports that circulated after Mr. Goldstein's remarks. Investors too have queried the impact a single gambler could have.

"Mr. Goldstein was simply using an anecdote that came to mind from his most recent visit to Macau," said Ron Reese, a spokesman for Las Vegas Sands. The company declined to comment further.

Macau's gambling revenues have seen a small revival over the past seven months, following a long decline triggered by a corruption crackdown by the Chinese government. But Sands China, the local subsidiary of Sheldon Adelson's Las Vegas Sands, hasn't caught the same wind of fortune. It posted a 2.5% fall in revenue and a 16% drop in net profit last year from a year earlier.

The Parisian, which opened in September, is the fifth property opened by Sands in Macau, the only place in China where casinos are allowed. The former Portuguese territory mushroomed from a one-casino resort in the 1990s to become seven times bigger than Las Vegas in terms of revenue by 2013, driven by rising numbers of high rollers from China enriched by the nation's economic boom.

Officials in Beijing, which curbed money outflows from China through Macau to stem corruption and prevent depreciation pressure on the yuan, want the city to become more of an entertainment hub like Las Vegas. Sands's latest resort is part of a wave of openings in response to that edict and casinos are now fighting for middle-class gamblers. Wynn Resorts Corp. spent $4.2 billion on Wynn Palace, which opened in August last year. Fourth-quarter earnings for Wynn's new Macau operation beat analysts' expectations.

VIP gamblers made up about two-thirds of Macau's gambling revenue in 2013, but that fell to 44% last year, according to data from Union Gaming, an advisory firm.

The Parisian's "win percentage" on mass-market table games--or the ratio of revenue retained by the house from wagers--was 18% in the fourth quarter out of a total of $895 million. At The Venetian, which is also owned by Sands, the figure was 25% out of $1.7 billion. At Wynn Palace, the win percentage was 22% out of $725 million.

"When you drop $900 million and you hold only 18%, you kind of say to yourself you lost $25 [million to] $30 million right there," Mr. Goldstein said on the investor call. Mass table games generated 50% of Sands's profit in Macau last year, compared with VIP tables which contributed 10%, according to company data. Bets at the tables start at around $25, compared with more than $1,000 dollars at VIP tables.

Mr. Adelson also weighed in on the issue during the earnings call, admitting the company hadn't maintained a sufficiently high hold rate.

"We estimate low hold in mass tables, particularly at the Parisian, impacted our Ebitda negatively," he said, referring to earnings before interest, tax, depreciation and amortization.

The probability of a gambler at the mass tables influencing a casino giant's earnings is low, said Angela Han Lee, an equities researcher at China Merchants Securities Co.

"It was very good marketing for the Parisian," she said of the account of the lucky gambler. "I've got many people, including clients, messaging me asking about it."

Other casino operators in Macau either didn't return requests for comment or declined to comment on the gambler.

Investors worry the problem lies in the venue itself.

"I think the design of the Parisian is not helping," said Alex Wong, director of asset management at Ample Capital Ltd., which holds 2.7% of its $100 million portfolio in Sands China. "The attractions are not [enough], and it's like a maze... There are some shortfalls in the design." Mr. Wong added that the Parisian's layout made it more difficult to navigate than other Macau casinos. Sands China didn't respond to requests for comment on the layout.

Sands has previously run into trouble over publicizing lucky punters. In 2011 it removed webpages announcing winners at its Marina Bay Sands resort after the Singapore government said it would take action against the company. Casino operators there are prohibited from publicizing the winnings of patrons.

At the Parisian's French-Asian Market Bistro restaurant, assistant manager Jim Ung said the reports about "Lady Luck"--as the gambler is nicknamed--had piqued his interest, so he had asked colleagues at the venue about the woman. He couldn't track her down.

"Every day, people are gambling, winning and losing," said Mr. Ung. Telling the story of the gambler, he said, may be an attempt "to make the Parisian famous."

Anjie Zheng

and Julie Steinberg contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

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Financials ($)
Sales 2017 12 420 M
EBIT 2017 3 030 M
Net income 2017 2 010 M
Debt 2017 7 714 M
Yield 2017 5,26%
P/E ratio 2017 22,14
P/E ratio 2018 20,72
EV / Sales 2017 4,19x
EV / Sales 2018 4,04x
Capitalization 44 353 M
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Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 60,4 $
Spread / Average Target 8,1%
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Sheldon Gary Adelson Chairman, Chief Executive Officer & Treasurer
Robert Glen Goldstein President, Chief Operating Officer & Director
Patrick Dumont Chief Financial Officer
Irwin Chafetz Director
Charles Daniel Forman Director
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