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Rod Smith

Sands Macau Packed, But Trailing Other Casinos

2 June 2004

MACAU -- Player demand for casino action at Sheldon Adelson's Sands Macau has kept the tables and slots packed with about 45,000 players on weekends and 35,000 players weekdays since it opened May 18, the company and Wall Street sources said Tuesday.

Analysts, however, said that while the Sands Macau is doing well compared to some of its counterparts in the United States, it is financially underperforming other casinos in the former Portuguese colony.

No data have been available from the company about the volume of business in the casino, but initial results reported by Deutsche Bank said the Sands Macau did $1.2 million in its first nine hours, or $139,000 an hour.

No data were provided breaking the results down into win per table or win per slot machine.

But the 12 casinos operated by Stanley Ho, who previously had a casino monopoly in Macau, reportedly did $8.7 million for the full 24 hours May 18, reportedly the the lowest of any day in May.

By comparison, Deutsche Bank analyst Marc Falcone said, the new Borgata in Atlantic City did $143 million in casino revenues in the first quarter of 2004, or $1.6 million a day and $65,500 an hour.

Greff said the dynamics of the gaming market in Macau are in flux, but bode well for Adelson and Steve Wynn, who will break ground for a casino there next month. Both have been granted licensing rights to compete with what previously was Ho's monopoly.

"Clearly, there is strong demand for table games, and more people coming out of Hong Kong and mainland China mean there is more than enough demand to absorb the new supply," he said.

Still, "Sands Macau needs ramping up. It's not on the same level as the (previously) existing casinos. They need to add higher-end tables," Greff said.

He said indications from a recent fact-finding trip he took to Macau are that the daily win per table at the Sands Macau is substantially shy of the $20,000 win per table per day in Ho's casinos, but, by comparison, Ho's casinos do 10 times the volume done in Las Vegas casinos.

Greff also said that Adelson's tables are dealing only 25 percent as many hands an hour as Ho's, largely because the dealers are all new to their trade, but that they can be expected to speed up with experience.

Falcone said any new operation runs into challenges, and those facing the Sands Macau do not suggest long-term problems.

The 1-million-square-foot Sands Macau is owned by Adelson's holding company, Las Vegas Sands, and has 277 table games and 405 slot machines.

Las Vegas Sands Executive Vice President Brad Stone said the gawkers of opening day are gone and the tables and slots have been consistently packed with serious players.

An estimated 50,000 gamblers and curiosity seekers flooded the $240 million complex on its first day, partly due to false reports that the casino was giving away free chips.

Stone said the initial crowds were "almost scary," and added security and barricades were necessary.

However, he said business quickly settled into a more normal pattern. He said that over the next two months the company will bring the number of table games to 320 with the opening of premier gaming rooms and add about 200 slot machines.

In addition, the Sands Macau plans to open 18 restaurants, bars and entertainment venues in its its premium facilities on July 18, which will let it start marketing to a more upscale clientele, Stone said.

He said the volume of business to date has been "pretty staggering."

Analysts also said credit legislation passed unanimously by the Macau General Assembly on Monday should boost Macau's casino business.

The new law becomes effective July 1 and will allow casino concessionaires and sub-concessionaires, as well as casino promoters, the ability to extend credit in the form of gaming chips as they do in Las Vegas.

The Sands Macau casino and entertainment complex is the first of several U.S.-owned and -operated casino projects planned to open in the Chinese enclave over the next several years.

In addition to the Sands Macau, Adelson plans to develop a $10 billion gaming destination resort on Macau's Cotai Strip.