http://www.macaubusiness.com/news/gaming/counter-attack.html
Counter Attack
Posted: 11/1/2006 3:22:00 AM
Sheldon Adelson was not happy when he read in the press – including Macau Business – that Phua Wei Seng, one of his most valuable junket agents, was now working for Wynn Resorts. In the end, according to sources in the gaming sector, the well-positioned Malaysian promoter only did what many others do in the business: work with other VIP rooms while keeping the ones he had before, regardless of who operates them. So he was working for both Sands and Wynn.
In October, Sands counter attacked, by having one of the main junket operators from Wynn.
The maneouver was allegedly the result of a misunderstanding between Steve Wynn and the boss of the company International Club, Wynn's main promoter.
Here's what happened: Wynn had initially promised a 1.2 percent base commission if the amount of chips bought at his resort by International Club players went over four billion patacas, but he later decided to apply the formula already being used by SJM: a 60/40 division. Apparently, the 60/40 solution is not as attractive to junkets.
The partners of Interational Club's promoter kept their tables at Wynn and, technically, operations were not abandoned, but, a few days later, the entire first floor of Paiza VIP Club in Sands Macao was offered to International Club leader. From what we could gather from a well-positioned source, he accepted a 1.1 percent base commission, plus an extra 0.1 percent if the amount of chips bought surpassed three billion patacas. During the last 13 days of October, the promoter kept himself busy and became Sheldon Adelson's main money earner.
Musical chairs
Despite apparent calm on the public front, with only one or two instances of disagreement, fierce competition raged backstage. The public has been given scant insight into the reasons why.
The most recent change came when former LVS Chief Operating Officer, Frank McFadden, was replaced. Before him, David Mitchell and Thuy Trinh had already been sacked. The later is now running the newest casino in town, Galaxy's Starworld. As for McFadden, he was hired by SJM as President New Business division and Joint Ventures, responsible for projects as Grand Lisboa and Oceanus, Hyatt rebuilding and Ponte 16, as well as some 10 other satellite casinos.
Smiles in government
At a time when new casinos are getting ready to open, the Macau government continues to smile with satisfaction. For 2007, a conservative estimate predicts a revenue of 20 billion patacas (US$2.5 billion) from the gambling tax. This is based on a 58 billion pataca (US$7.25 billion) total gross revenue from gambling, an increase of five billion patacas (US$625 million) over this year's estimated gross revenue.
If the market keeps up with the supply growth, these numbers could well be much larger. After all, Venetian will open in 2007, with around 850 tables and 4,100 slot machines, and a final target capacity of 1,500 tables and 7,000 slot machines. When we add the number of tables and slot machines from all the different hotels in the Venetian Cotai site, we come up to the staggering 2,900 tables and 16,000 slot machines. |