Click Now!

China Suffers from Gambling Slowdown

The quarterly earnings posted by Las Vegas Sands Corp, owned by Sheldon Adelson, were much worse than expected as casino profits in key Asian markets were lower and failed to help offset flagging US revenue.

As the world’s economic troubles begin to hit China, casino operators are reporting much lower than expected revenue growth.

Adelson normally benefits from the company’s sizable presence in Asia compared with rivals such as Wynn and MGM resorts. However, the global economic problems are now beginning to affect both Macau and Singapore. Analysts from Wells Fargo said that the latest results from the company’s Marina Bay Sands property in Singapore were a “substantial miss”. The initial earnings from Sands’ new Macau casino which opened in April, the Sands Cotai Central, were also much lower than expected.

Best known for its Italian-themed Venetian resorts in Las Vegas and Macau, Las Vegas Sands reported a second-quarter net income of $240.6 million down from $367.7 million last year, causing company shares to fall by 5.8%.

The net income for Sands Chine fell 40% to $160.5 million due to higher than predicted opening costs at its Cotai Central as well as a $100.8 million impairment charge on two land parcels. The last three months has seen growth in Macau slow down as visitor numbers drop and people spend less money. Fitch Ratings has revised its Macau revenue growth forecast for this year to 10 – 12% down from 15% which they said reflects their “more cautious view with respect to the near-term impact of the slowdown in China.”

Why Resorts has also reported weak second quart earnings due to poor performance at its Macau and Vegas properties. It will be interesting to see what MGM Resorts and local Macau businesses reveal when they report in August.

However, Las Vegas Sands executives said that business at Singapore’s Marina Bay Sands remains good and that the company expects to return more than $800 million in cash to shareholders as dividends.

OCA News Editor