As Las Vegas Sands Corp. is betting on Macau and Singapore, some experts warn that the move could entangle it with the Communist Party’s growing economic and political risks.
The company, which focuses on gaming and upscale resorts, announced March 3 that it has reached an agreement to sell its Las Vegas real estate and operations, including the Venice Las Vegas Resort and the Sands Expo and Convention Center, for a total of about $6.25 billion. At the same Time, the company plans to continue its operations in Asia.
The move marks the company’s growing interest in the Asian market.
Asia remains a pillar of this company, and our developments in Macau and Singapore are at the center of our attention,” Robert Goldstein, chairman and CEO of Las Vegas Sands Corp, said in a statement. We will continue to look for ways to reinvest in our assets and communities.”
According to the Nevada Independent, Las Vegas Sands Corp. is spending $5.5 billion to renovate and expand its casinos in Macau and Singapore.
However, some experts on Chinese economic and political issues warn that Las Vegas Sands is facing rising risks in the Asian market.
Xie Tian, the John M. Olin Palmetto Chair at the University of South Carolina Aiken, said the risks come from both the economic and political sides.
Sands’ investment in Macau is clearly designed to attract the Chinese, Xie Tian said. In the past, many Chinese Communist Party officials went to Macau to gamble, either for fun or to launder money.
However, Xi Jinping‘s aggressive “anti-corruption campaign” since 2012 has largely limited the ability of Communist Party officials to gamble in Macau or other parts of the world.
At the same time, China’s economy is performing poorly and foreign exchange reserves are tight, so there is little money for them to take abroad.
Professor Xie said, “The Sands Group has underestimated the economic risks.”
Another issue is political risk.
Xie Tian said that whoever previously helped the Sands Group obtain a gambling license, they have now become a liability. Some of the political figures who had previously established ties with Sands may have belonged to Jiang Zemin’s faction.
Jiang is a former Communist Party leader who leads a faction that has been vying with Xi Jinping for control of the party.
Xie Tian said, “In addition, the possibility of a total collapse of the Communist Party’s political system and economy is increasing, and the Sands Group has underestimated this risk.”
Sands Group’s investment in China (Macao) has grown dozens of times since it was granted a gaming license in Macao in 2002, becoming the first foreign gaming group to be licensed in Macao.
Macau gaming license renewal faces uncertainty
Sands is currently facing a number of uncertainties following its decision to shift its business focus entirely to China. One of the biggest issues is whether Sands’ gaming license in Macau will be renewed when it expires in June 2022.
The Macau government has not yet publicly disclosed whether it will renew Sands Group’s license. However, as tensions between the U.S. and the Chinese Communist Party continue, there are concerns that the renewal of Sands Group’s license may be affected because it is a U.S. company.
Back in late 2018, Hong Kong‘s Oriental Daily reported that there were rumors that the Macau government might openly bid for a gaming license, but details of the license renewal are not currently disclosed to the public, possibly because the Macau authorities are waiting for instructions from Beijing.
Macau media quoted Macau current affairs commentator So Man-yin as saying, “Apparently, one of the main reasons for the Macau government’s delay in announcing the license renewal arrangement is that it is waiting for instructions from the central government.”
He said three of the six licensed gaming companies are U.S. companies, including Sands’ Venetian Macao, which could be an important bargaining chip for the Communist regime in the U.S.-China trade war.
Hoffman, vice chairman of Success Universe Group, told Headline Daily that the renewal of Sands’ gaming license could be affected by U.S.-China tensions, and that the Macau government may intend to grant licenses to Chinese companies or change the rules for license renewal to benefit some local or Chinese-based companies.
Old relationship with Beijing faces new test
Sands’ assets in Macau include Sands Macao, the Venetian Macao, Plaza Macao, Parisian Macao and Londoner Macao, according to a company profile. The company also owns Cotai Expo, one of the largest convention centers in Asia, and Cotai Arena, the largest concert and performance venue in Macau.
The company invested $265 million in the Sands Macao in May 2004 and $2.4 billion in the Venetian Macao, which opened in August 2007.
Various lawsuit documents show that Las Vegas Sands obtained its gambling license in Macau through close contacts with Chinese Communist Party officials.
In 2004, Hong Kong businessman Richard Suen sued the late Sheldon Adelson, the founder of Sands, in the United States. He was a matchmaker between the Sands Group and the Chinese Communist Party. Sun claims he arranged a meeting in 2000 between Adelson and Qian Qichen, former vice premier of the State Council and director of the Hong Kong and Macau Affairs Office, and Liu Qi, chairman of the Beijing Olympic Committee and secretary of the Communist Party’s Beijing Municipal Committee.
Edmund Ho, then Macau’s chief executive, then granted a gaming license to Sands. Macau’s three gaming licenses were split into six.
After a 14-year legal battle, the case was settled in March 2019. The terms of the settlement were not released to the public.
Xi Jinping became the leader of the Communist Party in 2012. Since taking office, Xi has attempted to consolidate his power within the party to avoid being eliminated in factional political struggles. Many senior CCP officials linked to Jiang Zemin’s faction have reportedly been arrested during Xi’s anti-corruption campaign.
It is unclear whether the Jinsha Group has established close ties with Xi’s faction.
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