Spring 2011 developments in Macau gambling

Three are noteworthy, in my opinion:

March market statistics

Last Friday the Gaming Inspection and Coordination Bureau of Macau released its report on gaming revenue for the SAR during March.  The market total was just over 20 billion patacas (roughly US$2.5 billion), a new all-time high.  It’s also up by 48% from the same period of 2010–indicating that the mainland government’s measures to slow down the economy continue to have little effect on Macau.

The revenue number can be a bit deceptive.  Customary casino accounting practice is to count as revenue the amount lost by customers, not the (much larger) amount that they wager.  Given that Macau is mostly a high-stakes baccarat market, where the win percentage averages a tad below 3%, the total amount of all bets placed in the former Portuguese colony last month was likely in excess of US$80 billion.  This suggests Macau may approach the US$1 trillion mark in amount gambled for the full year.

According to soundings taken by local magazine Macau Business, there were no dramatic shifts in market share during the month.  The Ho family’s SJM led the market with a 34% share, followed by Sands China with 16%, Melco with 14%–slightly ahead of  Wynn Macau, which also had 14%.

This news is the main reason WYNN and LVS rose sharply in New York last Friday and the publicly traded Macau casinos followed suit in Hong Kong yesterday.

the Sands China lawsuit

Last year, LVS fired the CEO of Sands China, Steve Jacobs (whom I take to be the executive Steve Wynn described in such unflattering terms in an earnings conference call last year).  Mr. Jacobs promptly sued LVS, maintaining among other things that LVS had instructed him to prepare dossiers on prominent members of the Macau government so it would be able to exert improper influence over them, if need be.  Mr. Jacobs’ allegations have sparked a number of investigations by state and federal agencies in the US.  Last Thursday, Hong Kong announced its Securities and Futures is launching a similar probe.  My instinct is that the affair will turn out to be a monumental case of sour grapes by a terminated executive.  Still, the investigations bear close watching for shareholders of either LVS or 1928.

more Ho sibling strife

This time it isn’t the children and spouses of Stanley who are squabbling with him.  It’s his sister Winnie, who maintains that her holding in the parent of SJM was illegally taken from her.  What I hadn’t realized until I read an article by Macau Business is that the dispute apparently stems from 2001.  In that year, the share registry of SJM’s parent company–that is, the physical book in which the names and ownership interests of all shareholders are recordeddisappeared.  Other than that it is the official record of who owns what, apparently it contained the only evidence of Ms. Ho’s ownership interest.  You can’t make this stuff up.

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