Five years ago, the casino company that is now Harrah's Entertainment Inc decided not to bid for a gambling license in the booming Chinese enclave of Macau while its competitors pushed in their chips.
Now, the world's largest casino operator faces the prospect of being shut out of Asia -- regarded as the world's most dynamic gambling market -- after losing its bid last week to build a new resort in Singapore's Marina Bay.
Wall Street hailed bid winner Las Vegas Sands Corp, a company that earned credibility in the Far East by becoming the first North American casino company to open shop in Macau in May 2004. Las Vegas Sands now boasts nearly double the market capitalization of Harrah's, around US$25 billion, primarily because of its Asian growth prospects. Jefferies & Company analyst Lawrence Klatzkin increased his target for Sands' shares by US$8 to US$88.25 after the Singapore license win. Sands now trades around US$71.
Meanwhile, Harrah's is playing a game of catch-up in a region in which its Las Vegas-based competitors, Sands, MGM Mirage Inc and Wynn Resorts Ltd, are plowing billions of dollars and counting on rich returns.
"It's a concern," said Harrah's spokesman Alberto Lopez. "It's an area of concentration. It's an area where we know that we need to move forward deftly, if you will."
Analyst Dennis Forst of Keybanc Capital Markets said the loss puts Harrah's in a difficult position.
"It is a hole in their portfolio and something that they are probably spending a lot of time analyzing how to get into both Macau and other places in the Far East," Forst said. "It puts them obviously at a disadvantage in that part of the world."
Some observers say the game is almost up.
Wynn's US$1.1 billion Wynn Macau resort is set to open on Sept. 5, followed by a second Sands project, the US$1.8 billion Venetian Macao next year. Also, an MGM-Pansy Ho joint venture, the MGM Grand Macau, costing about US$975 million, is scheduled to be completed late next year, while others are in the works.
Macau is not likely to expand the number of gambling concessions and sub-concessions -- there are six -- at least through 2009 after overturning a monopoly in 2002, according to University of Macau law professor Jorge Godinho.
That leaves a second Singapore license -- on the resort island of Sentosa -- the only remaining opening in Asia for what could be a decade.
"Any contenders for that concession are all fully aware that it's a make-it-or-break-it decision," Godinho said.
"If they fail to get a license there, well, that's it. They would have to explore other markets in Europe or other parts of the world in the immediate future," he said.
Before the government in Macau handed out new casino licenses in 2002, many casino operators were hesitant to enter the former Portuguese colony, which once was rife with gangsters and had recently reverted to Chinese control in 1999.
Lopez said Harrah's decided not to bid partly because it could not offer the upscale Caesars brand, which it acquired through a megamerger last year. And even after Wynn won a Macau license in 2002, the company stalled construction over concerns about regulations that prevented casinos from extending credit.
But when the Sands Macao opened, casino companies came to a collective realization: Asians like to gamble.
The Sands paid off the US$265 million it took to build its casino within a year. Wynn quickly broke ground, then in February sold off a sub-concession to a pairing of Hong Kong-based Melco International Development Ltd and Australian firm Publishing and Broadcasting Ltd for a staggering US$900 million.
Last year, gambling win in Macau -- the net amount players lost after all the chips were counted -- rose 8 percent to US$5.7 billion, surpassing the Las Vegas Strip's take of US$5.3 billion.
Experts see Macau's gambling revenue growing quickly to US$9 billion to US$11 billion by 2010 and upward of US$15 billion by 2012.
"Asia is where the future of gaming is," said David Schwartz, coordinator of the University of Nevada, Las Vegas Gaming Studies Research Center. "It's definitely proving too good of a market to stay out of."
It's not yet clear how successful gambling will be in Singapore, and Harrah's has said it has yet to decide whether to make another bid.
The company spent considerable effort on its Marina Bay proposal, bringing in Hollywood director James Cameron to create attractions based on hit movies like Titanic and Aliens. In March, Harrah's chief executive Gary Loveman called the Singapore bid "our highest priority."
MGM and Sands have said that Sentosa is too much of a tourist playground for an integrated resort with meeting and convention space to work, and both companies have no plans to bid.
Wynn boss Steve Wynn withdrew from Singapore altogether last year, complaining of government heavy-handedness in the bidding process.
Unlike Macau, where gambling existed even before the Portuguese arrived in the 16th century, Singapore only last year lifted a decades-long ban on gambling in an attempt to attract tourism dollars.
‘UNFRIENDLY’: Changing the nationality listing of Taiwanese residents to ‘China’ goes against EU foreign policy as well as democratic and human rights principles, MOFA said Taiwan yesterday called on Denmark to correct its designation of the nationality of Taiwanese residents as “China” or face retaliatory measures. The Danish government in 2024 changed the nationality of Taiwanese citizens on their residence permits from “Taiwan” to “China.” The decision goes against EU foreign policy and contravenes democratic and human rights principles, Ministry of Foreign Affairs (MOFA) spokesman Hsiao Kuang-wei (蕭光偉) said. Denmark should present a solution acceptable to Taiwan as soon as possible and correct the erroneous designation to preserve the longstanding friendship between the two nations, Hsiao said. The issue could damage Denmark’s image and business reputation in Taiwan,
The nation’s fastest supercomputer, Nano 4 (晶創26), is scheduled to be launched in the third quarter, and would be used to train large language models in finance and national defense sectors, the National Center for High-Performance Computing (NCHC) said. The supercomputer, which would operate at about 86.05 petaflops, is being tested at a new cloud computing center in the Southern Taiwan Science Park in Tainan. The exterior of the server cabinet features chip circuitry patterns overlaid with a map of Taiwan, highlighting the nation’s central position in the semiconductor industry. The center also houses Taiwania 2, Taiwania 3, Forerunner 1 and
Taiwan climbed to its highest position in global export rankings in more than three decades last year, buoyed by demand linked to artificial intelligence (AI) that lifted shipments of semiconductors and technology products, Ministry of Finance data released yesterday showed. Taiwan accounted for 2.4 percent of global exports last year, or about US$640 billion, ranking 12th worldwide, the data showed. That was up four places from a year earlier and marked the nation’s best ranking since 1994, the ministry said. Taiwan’s share of global exports rose by 0.5 percentage points from the previous year, the largest increase among major economies, reflecting the nation’s
FIRST TRIAL: Ko’s lawyers sought reduced bail and other concessions, as did other defendants, but the bail judge denied their requests, citing the severity of the sentences Former Taipei mayor Ko Wen-je (柯文哲) was yesterday sentenced to 17 years in prison and had his civil rights suspended for six years over corruption, embezzlement and other charges. Taipei prosecutors in December last year asked the Taipei District Court for a combined 28-year, six-month sentence for the four cases against Ko, who founded the Taiwan People’s Party (TPP). The cases were linked to the Core Pacific City (京華城購物中心) redevelopment project and the mismanagement of political donations. Other defendants convicted on separate charges included Chinese Nationalist Party (KMT) Taipei City Councilor Angela Ying (應曉薇), who was handed a 15-year, six-month sentence; Core Pacific
RSS