Wynn, Adelson win licenses for Macau casinos

David Strow

Friday, Feb. 8, 2002 | 1:52 a.m.

Steve Wynn and Sheldon Adelson won the race to Macau this morning, as the government of the Chinese coastal city awarded provisional gaming licenses to the two Las Vegas casino resort developers.

In doing so, the two beat out the Strip's three largest gaming corporations -- MGM MIRAGE, Park Place Entertainment Corp. and Mandalay Resort Group -- which had also been vying for three Macau licenses. These companies are not out of the hunt, however, as Macau designated all three as alternates for gaming licenses.

Also left out were high-profile international operators such as Australian Kerry Packer and South African Sol Kerzner's Sun International.

The outcome, announced this morning, wasn't what some observers expected.

"They are surprising, because corporations can bring a lot more capital, and perhaps greater legitimacy," said Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. "(Wynn and Adelson's companies) aren't publicly traded, and don't have access to the public (equity) markets. Without knowing what happened in the process, one can only speculate."

In naming the licensees, Francis Tam, secretary of economy and finance for Macau, praised Wynn's "creativity and innovation" in creating Strip resorts such as the Bellagio and the Mirage. And Tam noted Macau wants to become a regional power in the convention business -- which could have tipped the scales toward Adelson, whose Venetian resort is anchored around convention business and is adjacent to his massive Sands Expo Center.

Wynn and Adelson will begin negotiations with Macau officials later this month. Should the men be successful in securing a final pact, each could open a temporary casino in Macau within a matter of months. Macau officials said each licensee must invest at least 4 billion patacas ($500 million) in their permanent projects.

"I think we'll be in business in April," Wynn said.

Wynn and Adelson will compete with Stanley Ho, who has held the monopoly on gambling in Macau since 1962, when it was a Portuguese colony. Portugal turned the city of 450,000 over to China in 1999, but like the former English colony of Hong Kong, Macau has been designated a "special administrative region" of China. This designation will preserve the capitalist system of Macau for the next 50 years, and gives local officials considerable autonomy over the area's affairs.

Macau's gaming market is sizable, grossing over $2 billion in gaming revenues in 2000. But it's a market that's been badly hurt by violence and organized crime in the last several years, Eadington said. Chinese gangs, known as "triads," have warred on Macau's streets and their influence has reached even into the casinos.

"A lot of players got scared off in the last five years by violence in Macau," Eadington said. " I've been to Macau, and it's really very seedy. It's the ugliest casino industry I've ever seen."

The desire to give Macau legitimacy -- and to break the influence of organized crime -- spurred Macau Chief Executive Edmund Ho to open the Macau casino market up to competition shortly after he took over in 1999.

One reason so many gaming operators were so interested in Macau is its location. The city is an hour from Hong Kong and is in the heart of the Pacific Rim, a key market for high-end play in Las Vegas.

"There's a long way to go for Macau," Eadington said. "The more they can achieve that, the more attractive they'll be to all the financial centers in Southeast Asia. The location is a fantastic place to be. Whether they can execute is another question."

Wynn -- who touched off the Strip's modern building boom in 1989 with the Mirage -- was excited about the opportunity to take Macau in a new direction. In appearance, "Macau looks just like San Diego," Wynn said.

"I bought the D.I. so I could have stuff to play with," Wynn said. "That's what turns me on in life, building stuff that makes people say, 'Wow.' The opportunity to be the first American company (in Macau) to do the kind of things we do there, to make the best hotel in Asia, is so delicious that it's irresistable.

"It's not about money, although I have no reason to believe it won't be profitable. It's about personal gratification."

Adelson, meanwhile, wants to bring his convention-centric formula to the city.

"I have been planning on developing the convention business in China for quite some time," Adelson said in a statement. "This license will certainly help expedite that development, but the Venetian would have developed a convention center in China regardless of whether it was granted a gaming license in Macau."

Both men, so far, haven't said what their new Macau casinos will look like. In fact, Wynn appeared before the Macau panel without any renderings or models.

The casino resort could be a shoreline resort, an urban, New York-style hotel, or even a golf resort, Wynn said. It won't be a copy of Las Vegas, he said.

"Macau doesn't need another Mirage or Bellagio," Wynn said. "Those were built, designed and conceived for the Strip in Las Vegas. What you need in Macau is a remarkable, wonderful facility that is Asian, that has the Asian market in mind. I must go to school and study."

Wynn said he owns 90 percent of Wynn Resorts Macao. His minority partner is Wong Chi Seng, a Macau textiles executive.

Adelson, meanwhile, decided to combine his efforts with another Macau bidder, Galaxy Casino Co. Ltd. Adelson's partners were identified by Macau officials as the Lui Chi Wo family of Hong Kong; Alfred Tsai; and Peter Ho On Chun.

"The Galaxy Consortium wants to be a bridge between Asia and the West," Adelson said. "We believe that our proposal will provide extensive benefits to everyone in Macau and will help energize the real estate market in the region."

Though Wynn is planning to build a permanent resort with a cost exceeding $500 million, he said it would not create any problems in his efforts to finance Le Reve, his proposed project for the north Las Vegas Strip at his Desert Inn site. Wynn said investment bankers will begin seeking financing for Le Reve in four to five weeks.

"It's a separate issue ... it's much smaller money in Macau," Wynn said. "They're separate issues, separate companies."

If Wynn, Adelson or Ho -- who was also awarded a license today -- are not successful in reaching a final agreement with Macau, negotiations would then proceed with the alternates -- first MP Entertainment, then MGM MIRAGE.

Park Place and Mandalay, which would be first in line, aren't yet throwing in the towel. In a statement this morning, Mandalay President Glenn Schaeffer said the companies "remain committed to participating in the process."

"We believe our partnership presents a unique opportunity to bring to Macau the experience, creativity and resources of two of the world's biggest and best gaming companies in building a world-class attraction," said Park Place Chief Executive Tom Gallagher. "We will continue to work with the government to pursue that opportunity and we remain optimistic that the great advantages of our project and our venture will be made available to the people of Macau."

MGM MIRAGE spokesman Alan Feldman said the company was "disappointed" in not being named one of the licensees.

"But we're pleased to have participated in the process, as the government held a thorough and rigorous bidding process, and we fully support their decision," Feldman said. "If at some point in the future, there is an opportunity for us to discuss a role for us in Macau, we'd be happy to do that."

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