p14-20 Macau 16/1/09 08:27 Page 16
MACAU BUSINESS
to perform so people’s sentiments often change the use of
when it turns from a vision to something that leverage had
actually is operating. The credit crisis has generally got out
turned this on its head. Now businesses that of hand. And you
actually make money are more valuable than an certainly saw it in
idea or a project. the gaming
industry and in
‘Arms race’ lots of others.
Now you’re
Is that a bad thing? seeing perhaps
I think that, broadly, it’s helping. Stopping an excessive
this ‘arms race’ of who has the most expensive reaction at the
building, the fanciest restaurant, the largest other end of the
convention centre, is a healthy thing for the spectrum. But
industry to go through. It’s not a consolidation hopefully, things
but a catharsis. People really have to stop and will settle in a
ask if these projects can make money. more reasonable
place.
Speaking of which… Harrah’s was
negotiating a $535 million casino in Sumner In other words, the crisis has killed current administration over time, and it will
County South of Wichita, Kansas, which was everyone’s expansion plans, including have an even better chance with the Obama
cancelled. Was this all because of the crisis Harrahs’ ? Administration. Poker is seen by politicians in
in the financial markets? Unless someone has something that is largely the US as a very different activity from casino
You can’t finance these projects if you have finished – like City Centre or Steve Wynn’s games. Its seen as much more as a skill oriented
to go out and raise money for it. There’s just no Encore in Las Vegas, or a project that is a very game with a more intellectually meaningful
market to provide debt finance. Every one of long way towards completion – I think you’ll content. It is also something they are all very
the companies that were given opportunities in see very little activity in the near future. familiar with.
Kansas have all withdrawn, including ourselves Politicians either are, or consider themselves
and it’s all for the same reason – you simply Harrah’s along with MGM, and under the to be poker players while many are not active
can’t finance these projects because of the AGA umbrella, has been pushing for the casino visitors and so I’ve always thought that
liquidity crisis. There’s no lender prepared to legalisation of Internet gambling. You poker has a very strong argument in the
lend money on that scale into the casino already own the World Series of Poker and United States.
industry. We liked that project very much, we have a comfortable step into the online There are two issues that press this. Firstly,
thought it was a very profitable project in a poker and gambling world. Do you think the regulatory lapses with off-shore casino
very desirable market, but at present it is not Internet gambling is something that could gaming operators – where customers were
one we can finance. Hopefully we will get happen in the short term in the US under defrauded of the money they wagered on
another shot at that, later. the new administration? these websites. It’s very difficult for American
Well, let me take that in three tranches: I regulatory bodies to police these offshore
Is this a wake up call? Not so long ago the don’t think we have any chance of having entities so there’s an argument that if this is
sky was the limit, especially in Macau and in Internet sports betting in the US anytime in going to happen why not have it done
Asia. Do you see what has happened as a the near future. The issue is not so much the properly by American regulated entities.
lesson to all? administration but the sports leagues and the Secondly, the need for tax revenue which
I think it is. The fundamentals underlining athletic associations who oppose it – very would support the liberalisation of online
forcibly – and gambling.
they are a very
persuasive Harrah’s suffered a $130 million loss in
political group. the third quarter, compared with a $244
Internet million profit over the same period last year.
casino gaming, You’re in the process of closing down a data
slot machines, centre in Memphis. How long can the
21, that sort of company withstand losses and what is
thing, has a Harrah’s doing to keep the money rolling in
chance, but less their operations?
so than the Like any casino operator, we have suffered a
third case, decline in revenue. The challenge is to get our
which is poker. expenses to be commensurate with our revenue
Poker has a so that we can hold our margins. Unfortunately
very good that has required some reductions in staff,
chance, it pursuit of efficiencies in all areas such as the
would have had consolidation of the Memphis data centre with
a good chance our IT activities in Las Vegas which is part of a
with the general effort to contain costs.
16 FEBRUARY 2009
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