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One doesn’t need incredible powers of deduction and analytical skills to conclude that Sheldon Adelson has probably annoyed the powers that be in Beijing and the Macanese government. Our contacts indicate this may actually translate into action.

Beijing knows who the junkets are and could pressure them to direct Rolling Chip business away from the LVS properties to the new Crown casino opening up in Q2. Moreover, Beijing may facilitate faster visa approvals for Crown customers. Finally, Beijing will surely influence the choice of the next Chief Executive of Macau. The Macanese government may have the power to redistribute Lots 7 and 8 on Cotai currently controlled by LVS. The government could take it a step further and take control of Lots 5 and 6 which have been partially developed (Sheraton, St. Regis, etc.) also currently controlled by LVS.

Given the black box that is Beijing, no one knows for sure what will happen. However, it is pretty clear that Adelson has gone too far and some significant consequences may follow. Add this to the growing list of issues facing LVS including: liquidity, covenants, a Las Vegas depression, and the likely sharp downturn in the Macau Rolling Chip segment.