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Sands investing $3.5B in Macao, after receiving license renewal

Updated December 21, 2022 - 1:56 pm

Las Vegas Sands Corp. will tear a page out of the Las Vegas playbook when it invests $3.5 billion over the next decade in launching restaurants and nongaming tourist attractions to attract international visitors to Macao, the company announced Monday.

It plans to develop several new restaurants and introduce international culinary concepts to support Macao’s position as a “city of gastronomy.” Sands will also launch a luxury yacht experience featuring onboard dining and entertainment including celebrity appearances, as well as water sports.

The announcement comes on the heels of Sands receiving permission from the government of Macao to continue its operations there, along with two other Nevada-based casino companies.

Sands’ expansion also will include a nearly 40,000-square-foot Le Jardin (“The Tropical Garden”). Sands officials said the planned garden-themed attraction would include an iconic conservatory with themed green spaces and amenities. The conservatory is intended to become “a Macao landmark of international renown,” providing a year-round attraction for tourists and residents.

“Our vision, and the strategy we will use to guide us, will help the government reach its important goals of continuing to grow Macao into a world center of tourism and leisure, promoting its economic and industrial diversification and enhancing its international reputation,” Wilfred Wong, president of Sands China Ltd., Sands’ Macao subsidiary, said in a release.

Wong said the company would expand, improve and optimize the scale and quality of its convention centers, including the development of a new meetings facility near the Cotai Expo that would be nearly 200,000 square feet and designed to host large-scale international events.

Sands China also announced Monday a new comprehensive overseas marketing strategy:

— Focusing marketing expenditures in overseas markets, including overseas media and distribution platforms.

— Increasing the company’s network of international sales offices in Asia, Europe and the United States.

— Hosting an annual large-scale international business exchange event — “Macao Showcase” — at its Marina Bay Sands resort in Singapore to elevate the exposure of Macao as a tourism destination.

— Targeting international customer markets, including South Korea, Japan, India, Southeast Asia and the United States.

Even more taxes

The Macao license renewal brings with it an increase in taxes for Sands.

In a securities filing Monday, the company disclosed that it would be required to pay a tax of 35 percent of gross gaming revenue; a 3 percent of revenue tax specifically for urban development, tourism promotion and social security; and a 2 percent of revenue tax to a public foundation in Macao for the promotion, development or study of culture, society, economy, education, science, academic and charity events.

If Macao casinos’ annual gross gaming revenue surpasses $22.4 billion, the company would be required to invest more on nongaming amenities by tiered percentages over the 10 years of the new agreement.

Sands also is committed to paying annual gaming premiums of $18,846 per table and $124 per slot machine. With 1,680 tables and 3,700 slot machines, the company’s commitment would be nearly $32 million. There’s also a special premium of about $37,291 per gaming table located in special gaming halls reserved exclusively to certain kinds of games or to certain types of players.

Extensions granted

In addition to Sands, Wynn Resorts Ltd. and MGM Resorts International were among six casino companies to win gaming extensions, following a process in which seven companies were vying for six concessions. The contracts will take effect Jan. 1.

The Genting Group, which operates a casino in Singapore and a late entry to the concession process, was the lone company that did not receive a concession.

The government announced in a news release Friday that the six casino operators signed their 10-year contracts Friday. The firms promised to invest a total of 118.8 billion patacas, an estimated $15 billion, with more than 90 percent going toward “exploring overseas customer markets and developing non-gaming projects,” and the remainder earmarked for gaming investment.

Wynn and MGM have not publicly detailed their investment plans in Macao.

“On behalf of Las Vegas Sands and Sands China, the entire company is both honored and eager to continue investing in Macao’s development, its diversification, and its success,” said Rob Goldstein, chairman and CEO of Sands, the market leader in Macao.

Adelson pushed for Cotai

“We look ahead today with the same confidence and enthusiasm in Macao’s future that our founder, Sheldon G. Adelson, did two decades ago when he committed himself to the vision of the Cotai Strip. We are thankful for the continued trust of the Macao SAR government, for the spirit of service and excellence of our team members, and for the opportunity to participate in the success of one of the world’s most unique leisure and business tourism destinations.”

Adelson was the key proponent for reclaimed land by infilling between Coloane and Taipa islands to create the Cotai Strip, where the company has its flagship The Venetian Macao resort and its Parisian property.

“We are excited and honored to carry forward together with all stakeholders in supporting Macao’s growth as a world center of tourism and leisure, and to support and strengthen Macao’s role in the greater bay area,” added Wilfred Wong, president of Sands China Ltd.

Sands China’s tender submission in September highlighted the company’s level of previous investments in Macao, including in nongaming areas, and detailed the company’s plans to help broaden Macao’s appeal as an international tourist destination. Other highlights included Sands China’s support to local SMEs; its community outreach, volunteerism, and charitable giving; and its training and development programs for team members.

‘Potential of Macao’

Wynn Resorts (Macau) S.A., whose renewal of its gaming concession covers Wynn Macau and Wynn Palace Cotai, said in an emailed statement: “Through our extensive and positive discussions with the Macao government, we are confident that the market holds significant future opportunity. We thank the government for its partnership and look forward to further supporting Macao as a world tourism and leisure center.”

MGM, which operates in a partnership as MGM Grand Paradise Ltd., also announced its new concession contract Friday.

“On behalf of MGM Resorts International, I would like to express my heartfelt gratitude to the Macao SAR government for giving us support and opportunity on the new gaming concession,” said MGM Chairman and CEO Bill Hornbuckle, who also serves as chair and executive director of MGM China Holdings Ltd.

“We always believe in the strong potential of Macao,” he said. “As Macao is entering a new milestone, we will continue to share our international network, experience and resources with the Macao team.”

Managing Director Pansy Ho, daughter of longtime Macao casino magnate Stanley Ho, said the gaming concession renewal represents an important milestone for the company.

“I am truly grateful for the trust and recognition by the Macao SAR government,” she said. “The new concession also ushers in a novel development opportunity for me. With excitement and unwavering spirit, I will devote myself to taking up the responsibilities over the next 10 years and carrying out the company’s commitments to Macao. We strive to propel the city forward, and will continue to leverage our strength to bring forth innovations, giving fresh impetus to Macao’s position as ‘One Center, One Platform, and One Base.’”

Choppy revenue picture

Macao has experienced choppy gaming revenues over the past two years as a result of the central Chinese government’s “zero-COVID” policy that has shut down cities on the Chinese mainland and closed borders that have kept tourists away.

Macao’s Gaming Inspection and Coordination Bureau said the region has had only one month — February — in which the region’s 39 casinos made more money than a year earlier.

November’s total revenue of $374.4 million (U.S) brought the 11-month gaming revenue total to $4.83 billion, just over half what casinos made in 11 months in 2021.

Macao continues to be handicapped by travel restrictions and border closures imposed to stop the spread of COVID-19. The Chinese central government’s zero-COVID policy results in health administrators ordering people quarantined for several days if they test positive for the disease.

The Review-Journal is owned by the Adelson family, including Dr. Miriam Adelson, majority shareholder of Las Vegas Sands Corp., and Las Vegas Sands President and COO Patrick Dumont.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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