Hiding Vices in Vegas Seven

Inspired by a conversation with September Gaming Research Fellow Kah-Wee Lee, I wrote a Green Felt Journal for Vegas Seven about Singapore and Las Vegas:

Imagine a casino-resort complex built by a world-renowned architect responsible for iconic buildings on multiple continents. From the start, it’s designed to be more than a mere gambling hall: It will have unparalleled convention facilities, restaurants helmed by celebrated chefs and buildings that look nothing like anything that’s been seen in Las Vegas before.

If you’re MGM Resorts International, you’ve just built CityCenter. It has posted operating losses each quarter since it opened; the company is attempting to implode the Harmon, which was to be its gateway structure. While it’s debatable to claim that it’s a failure, it certainly hasn’t been a catalyst for a dramatic rebound on the Strip, as MGM CEO Jim Murren forecast it to be, and no one’s claimed that it’s been particularly successful.

But if you’re the Las Vegas Sands Corp., owners of the Venetian and Palazzo, you’re presiding over the Marina Bay Sands, which recorded $585 million in net revenues in the first three months of this year—nearly double what the company’s Las Vegas properties brought in. And the Marina Bay resort is still ramping up.

via Vices, Hidden and in Plain Sight | Vegas Seven.

It’s a matter of perspective, isn’t it? And location, naturally.

G2E on the move in V7

It’s a busy week, but I still had time for a Vegas Seven column about G2E moving:

Over the course of a week, Las Vegas hosts conventions and trade expos for industries from baking to sheet metal. So it’s not surprising that the world’s premier casino industry trade show, the Global Gaming Expo, is held here each fall. A recently announced change of venue for the convention highlights the important role the meeting plays in the national casino landscape.

via Gaming show finds a new home | Vegas Seven.

It’s a huge show, and I agree that the move will reinvigorate it. For now I’m going to enjoy G2E’s swansong at the LV Convention Center. Look for me to cover this in greater depth as we get there. I’m planning to pick out one, and perhaps two, stories to focus on, which will trade clarity on a single subject for a more comprehensive view. I figure that since the dailies will be doing the big picture stories, I can use my column to zero in on a single subject that might otherwise be neglected.

Marina Bay Sands opens

Big news in the international gambling scene, as the Marina Bay Sands has finally opened. From the Financial Times:

Singapore has imposed a charge of S$100 (US$73) a day or S$2,000 a year for residents to visit the tables as a way of calming vocal opposition to the casino developments from locals who fear a spread of gambling addiction and crime.

The government is also encouraging people with a gambling problem to add themselves voluntarily to a national blacklist of people who will be refused entry to the casinos.

However, analysts say the two resorts are likely to generate a flood of well-heeled overseas tourists, adding up to 1.6 percentage points to gross domestic product in a full year, according to official forecasts.

The government wants to buttress the island state’s burgeoning financial and manufacturing sectors with tourism earnings of S$30bn in revenues by 2015 – triple today’s figure.

The US$5.5bn Marina Bay Sands, a stunning development on the waterfront in the city’s business district, boasts a 1.2 hectare skypark, spanning three hotel towers and floating 220 metres above the pavement. The area is likely to become something of an architectural icon, even though the skypark bears a passing resemblance to a stranded boat.

Sheldon Adelson, chief executive of Las Vegas Sands, confirmed on Tuesday that the company expected to recoup its investment within five years, with a Singaporean contribution of more than US$1bn a year to earnings before interest, tax, depreciation and amortisation.

Genting’s development, the US$4.7bn Resorts World at Sentosa, opened in February. It appears popular with punters, although no figures have been published.

The resort, located on an offshore leisure island, will have four hotels when it is fully open, together with a Universal Studios theme park and the world’s largest oceanarium alongside the gaming tables.

via FT.com / Companies / Travel & Leisure – Singapore opens second casino resort.

Extrapolating from the information in the article, the Singapore government wants to use the casinos to triple tourism revenues to S$30 billion. That means they expect the casinos to add S$20 billion a year in total revenue, which is about US$14.6 billion.

The entire Las Vegas Strip, which includes two dozen casinos and more Cirque shows, ultralounges, and meeting rooms than you can count, made $13.8 billion last year. Even with a theme park at Sentosa Island, I’m not sure expecting two casinos to lead a $14.6 billion increase is realistic.

Macau gloom bandwagon

For a while, the Big Story was how hot Las Vegas was. Then it was Macau: The Next Generation. Now that Vegas has cooled off a bit and Macau’s hitting a plateau, we’ve got a new story: Macau is in dire straits. Even Time has picked it up:

But in the wake of the faltering global economy, Macau is not such a sure bet anymore. The problem is that some of those giants embarked on overzealous building sprees — since 2004, the number of casinos in Macau has more than doubled to 31 — and now the global credit crisis is threatening to topple at least one of them. Adelson's company, Las Vegas Sands, has undertaken an aggressive expansion plan over the past few years, winning the bid to build the $4.6 billion Marina Bay Sands casino-resort in Singapore and developing a $743 million casino-resort in Pennsylvania, among other projects. The credit crisis has left the overextended company in danger of defaulting on $5.2 billion of loans secured by its Las Vegas operations. Last week, the company said it would work towards completing the Marina Bay site, but Singapore's government is making backup plans to enact if the Sands fails to raise the necessary funds to complete construction. Then, on Nov. 13, the cash-strapped company announced that it would layoff up to 11,000 construction workers in Macau, after its decision to suspend work on part of the Cotai Strip — a $12 billion undertaking. On Thursday, Las Vegas Sands' share price closed at $5.58, down 95% from its peak last December.

Dark Days Ahead for Asia’s Las Vegas? – TIME.

If you factor out the visa restrictions and other extrinsic factors, it’s hard to argue against Macau’s growth in the long term. Of course, all those extrinsic factors are what makes Macau…Macau.

I just wish that we could get stories weren’t so extreme. It’s always “this is the best every” or “things can’t get any worse.” Usually, though, things can get better, and of course things can always get worse.

But I doubt you’ll see a story whose gist is: Macau is a promising market but it’s currently got challenges that only smart operators will be able to overcome. It’s too nuanced, and it probably requires too many value judgments.

First thoughts on Palazzo

I stopped by Palazzo today and thought I’d share my impressions. Here are a few disorganized thoughts, without even the dignity of ellipses….

It’s a VERY soft opening, with incomplete finishes in the casino area and very little open. It’s neat seeing the casino as a work in progress, but if I was a paying customer I’d probably want to check in to the finished product.

Walking through the empty valet area and into the porte cochere felt strangely like walking on a dry river bed. You can tell that the driveway is meant to be filled with cars, and without them you feel a strange emptiness.

Inside the porte, and WOW. The atrium is majestic without being pompous. I wasn’t sure that they could pull off a Venetian theme in the post-literal theme era, but they’ve done it. I really like what they did here. Neat central statue thing that looks like three women ascending to heaven on a Tron light beam.

The marble floors have that cubical Venetian pattern that unfortunately reminds me of Q-Bert. I just want to hop around and avoid nasty bouncy things. Actually, it’s wait by an elevator disc and lure the nasty bouncy things to their death. If you don’t get that, you never played the game. And that’s probably not a huge loss.

Four paragraphs in, and I’ve abandoned casino design for a rambling commentary on an obscure Pacman knockoff. Maybe I’m getting a little burned out with the casino pundit thing. And for more 80s geek stuff.

The pay phones have complementary pads of paper and pens nearby. Pay phones? In 2008? Seriously, those can’t get much use.

Took a few quick pictures of the carpet–neat, but nothing breathtaking. Look for an update this week once I format them.

I can’t say anything about the rest of the property, because I didn’t see much, but the casino itself doesn’t seem that interesting. It’s supposed to be 105,000 square feet, but looks much smaller for some reason. You’ve got clear sight lines from one side to another, and a raised lounge that you can see everything from. I guess they didn’t talk to Bill Friedman, or they just don’t want to dominate the competition. The ceilings aren’t particularly high, but you definitely think “slot barn” on walking in.

Speaking of slots, slot bases still have areas for drop boxes, with locks on them. Is Las Vegas still that far behind the Borgata’s box-less slot bases? Or is a return to coin-based slot gaming in the cards?

Zebra-skinned, unnamed bar/lounge area in the back looks pretty retro. I like it.

Some kind of upscale wallet kiosk on the casino floor itself. Look for more integration like this is the future.

Still no Harry’s Bar here, or in the Venetian. Why not?

All in all, it’s taken the core elements of the Venetian theme, upped the level of finish, and produced something that is contemporary but clearly related to the more Old World-style Venetian. As the property is finished over the next few months it might not be the best place to stay, but once they stop construction it should be one of the Strip’s leading properties. I’d give it an A for execution, B- for imagination. Remember, this is without having seen the interiors of any of the restaurants, theaters, or guest rooms–just the casino and the public spaces that were open as of 12/31/07.

Venetian Macau is big, but Macau is bigger

If you’re not totally Macau-ed to death by the coverage of the Venetian Macau’s opening, here’s a great summary of what the big deal is. From the Economist:

Its construction involved filling in the sea between two of Macau’s islands to recreate the Las Vegas strip, and then carefully cutting out tiny canals to provide at least a hint of Venice. On August 28th the Venetian Macau, the world’s biggest casino, opened its doors to an ocean of people eager to get to its tables.

A packed ceremony in the casino’s 15,000-capacity arena culminated in Diana Ross singing “Ain’t No Mountain High Enough”—reflecting, perhaps, the hopes of both the gamblers with their stacks of chips, and the firm behind the casino, Las Vegas Sands. It would be hard to find a project more amenable to hype, or an industry less shy about disclosing its extravagance. The enormous building, Asia’s largest, required 20,000 construction workers and 3m sheets of gold leaf. Running it takes 16,000 employees and enough power for 300,000 homes. Construction costs swelled from $1.8 billion to $2.4 billion—more, the South China Morning Post pointed out, than Macau’s entire public-works budget for the past five years.

The Venetian has 870 tables and 3,400 slot machines in the world’s largest gambling hall, which is encircled by 350 shops, more retail space than any Hong Kong mall. That is also over twice as many tables as existed in all of Macau in 2002, when a local monopoly was broken and the Las Vegas operators were allowed in. This brought together American firms, with their business plans and architectural schemes honed in Nevada, and enthusiastic Chinese punters. Macau’s old casinos could not compete. Las Vegas Sands opened its first casino in Macau in 2004, and it became profitable overnight, as did casinos opened by fast-moving rivals. Investors took a while to understand the market’s potential, but between late 2005 and early 2007 shares in Las Vegas Sands doubled.

Chinese gambling | Macau wow | Economist.com

Is the Venetian really the largest building in Asia? I’m not saying it isn’t, but that’s a pretty grand claim.

I don’t even want to think about how they do table drops for 870 games. The next time I’m over there, I’ve got to get a tour and see how they can get a place that big to work. Scheduling dealers alone must be quite a task.

I wonder what Venetian Macau would have cost to build in Vegas? Considering that it was cheaper to build than Wynn Las Vegas and much bigger, I’m guessing that the costs might be prohibitive.

Macau’s Fortune

Interesting summary of the current state of Macau from Fortune, via CNN:

Hunter S. Thompson would have found much to fear and loathe in Macau, the former Portuguese colony rebranding itself as a gambling paradise. The good doctor (rest his soul) would have been vexed to discover that Macau, surrounded by water and crowded immigration checkpoints, is best entered by ferry, not gas-guzzling Caddy. No doubt he’d have been dismayed to learn that since Macau’s 1999 return to Chinese rule, hallucinogenic substances aren’t easily procured. But then again, when you can gaze at the Grand Lisboa casino, the newly built neon orb that throbs and pulses at the edge of the Macau peninsula like the Technicolor egg of some gargantuan radioactive monster, who really needs peyote?

Indeed, Western gamblers looking for something more exotic than Reno or the Riviera are in for a bit of a shock when they arrive in this smog-shrouded enclave. In Macau’s city center, the pastel façades of Senado Square and the ruins of St. Paul’s cathedral evoke Macau’s four centuries under Portuguese rule. But the frenzy of development elsewhere lends this Old World city the feeling of a frontier boomtown (albeit a relatively sober one: Macau’s hard-core gamblers prefer tea to liquor).

While Macau is now the world’s gaming capital last year revenue surged 22%, to $7 billion, vaulting the city ahead of Vegas – there are just a few decent restaurants and not much in the way of shopping or shows to speak of (yet). Still, Macau is a fascinating place to watch some of the most intense gambling around, both at the baccarat tables and amid vast, dusty construction sites, where high-rolling developers are betting billions.

The island was closed to all foreign competitors till 2002, when Beijing stripped local tycoon Stanley Ho of his monopoly over the island’s gambling concession, which he had held for 40 years. Faced with new competition, Ho (who also controls the lottery, dog and horse racing, the ferry and helicopter terminals, and the city’s largest land bank) rushed to gussy up some aging properties and build new ones. On a recent visit to his newest, the Grand Lisboa, a troupe of Russian street players performed slapstick routines beneath crystal chandeliers in the front lobby, while on the gambling floor upstairs, a trio of cabaret dancers shimmied in front of a giant oval of orange jade.

Ho’s offspring have also benefited from the boom: His son Lawrence partnered with James Packer, Australia’s richest man, and in May they opened the $500 million Crown Macau on the island of Taipa. MGM Mirage, owner of Las Vegas’s Mirage and Bellagio casinos, has teamed with Ho’s daughter Pansy to build a 28-story, 600-room hotel and casino set to open later this year on the waterfront.

Vegas entrepreneur Sheldon Adelson, however, is making the biggest wager that visitors here will want to do more than just gamble. After recouping his $240 million investment in the Sands Macau in just eight months (the cavernous casino set the world record for the largest number of gaming tables under one roof), he’s getting ready to throw open the doors of another Vegas outpost, the $2.2 billion Venetian Macau, on Aug. 28. The Venetian is the first phase of a truly mammoth complex slated for completion next year, which will include 20,000 rooms operated by five luxury hotel chains such as Four Seasons and Raffles. This so-called Cotai Strip (named for a bit of reclaimed land between the islands of Coloane and Taipa) will feature hundreds of yet-to-be-named restaurants and boutiques; a labyrinth of exhibit halls, performance stages, and conference rooms; and three Venetian-style canals plied by authentic Italian gondolas. The whole shebang will be sheathed in an air-conditioned biodome.

Around the perimeter of Adelson’s complex, Packer and Lawrence Ho have begun construction of City of Dreams, a giant casino and underwater theme park. Nearby, another group is building Macau Studio City, a casino-cum-multimedia-center that will include a boutique hotel designed by Shanghai Tang founder David Tang.

Macau now – July 9, 2007

It’s interesting to see how the idea that Macau is the leading gaming destination in the world is slowly filtering into the mainstream. I wonder if 10 years from now anyone will even have to say it.

Macau confirms: it’s bigger than Vegas

It earns more in gaming revenue than the Strip, at least. It was either this or a post on Stanley Ho’s medical issues, and I honestly can’t think of anyway to properly blog on that one. From news.com.au:

MACAU says it has overtaken the Las Vegas Strip as the world’s biggest casino draw, raking in more than US$7 billion ($8.58 billion) in 2006.

The tiny southern Chinese enclave’s 22 casinos generated 16.7 billion patacas in the final quarter, taking the year’s total gross gaming revenues to 56.2 billion patacas ($8.83 billion).

By comparison, the 40-odd casinos on Las Vegas’ famous main strip – including the plush Venetian and MGM resorts – generated $US6.6 billion ($8.09 billion).

Macau’s renaissance from a crime-ridden territory with an ailing gaming sector was led by the Las Vegas Sands company, which opened the Macau Sands in 2004.

Other big American names to have taken advantage of the relaxed regulatory environment are Steve Wynn’s resorts and MGM.

Australia’s Crown casinos and Hong Kong’s Galaxy have also opened gaming centres.

Analysts tipped in October that the city had overtaken Las Vegas, based on earnings projections.

But today’s GDP figures are the first time that city officials have confirmed the historic development.

Gambling earnings have boomed in Macau since 2001 when the Government ended tycoon Stanley Ho’s 40 year monopoly on casinos in the city and allowed foreign operators to move in.

Macau punts Las Vegas in casino stakes | NEWS.com.au

There’s one thing I found very interesting: that in Australia, the Venetian and MGM are considered the major Strip casinos.

Another is that I wouldn’t describe Macau’s pre-2002 gaming sector as “ailing.” I’m going to quote from Roll the Bones here:

Rising from around 30% of the public revenue to nearly two-thirds of it, STDM’s gaming taxes kept Macau’s administration afloat throughout the 1980s and 1990, when Stanley Ho’s enterprises contributed around 80% of Macau’s tax revenue.

I don’t have the absolute revenue numbers at my fingertips right now, but that sounds to me like Uncle Stanley wasn’t losing any money on his casinos.

And congratulations to Hunter at Two Way Hard Three, who has the top Google result for “macau gaming revenues.” I can boast the top result for “casino carpet.”

Singapore Sands?

It sounds like a drink you’d buy in a Asian-themed bar, but that might be the name of the Marina Bay casino/hotel/resort in Singapore, as Las Vegas Sands won the bid to build a casino in the Marina area. From Yahoo Finance:

Singapore picked Las Vegas Sands Corp. to build and run what will be the world’s most expensive casino at a cost of more than S$5 billion (US$3.2 billion), sending the U.S. casino operator’s shares up more than 9 percent.

The tiny island nation scrapped a ban on casinos last year in a move to shake off its staid image and capture part of Macau’s success as a gambling center for Asia’s increasingly wealthy and mobile middle class.

Las Vegas Sands, the world’s largest gaming operator by stock market value, beat three other bidders with a promise to invest S$3.85 billion (US$2.4 billion) in the project, on top of the S$1.2 billion price tag for the land in downtown Singapore.

“This is a pretty big win for Las Vegas Sands,” said Peter Dunay, chief investment strategist at fund management firm Leeb Group. “As far as real strong explosive growth, it is coming from the strength you are seeing in the Asian (market).”

Sands wins bid for Singapore casino: Financial News – Yahoo! Finance

Bill Eadington announced the decision at the International Conference on Gambling and Risk-Taking on Friday and showed the crowd a rendering of the casino design. It looks spectacular, with what looks like three decks of cards supporting a “hanging garden” feature. I’m already looking forward to 2009, when the resort will open.

VIP rooms

One of the things that struck me in Macau casinos was the prevalence of private VIP salons. Leased by junket operators, they give a share of profits to the casino but seem to be independently run. At last, there’s something in print that explains the phenomenon.
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