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Posted At : April 22, 2008 10:38 AM | Posted By : D McKee
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Macau,MGM Mirage,Stanley Ho,Harrah's,Steve Wynn,Sheldon Adelson
So says the enclave's CEO, Edmund Ho, in a blockbuster announcement. While a new wave of concessions and sub-concessions was hoped/forecast for 2009, Ho's announcement appears to slam the door on new market entrants for several years to come. Sheldon Adelson, who predicted a casino freeze -- and possibly a rollback -- proves prescient once again.
Stocks of MGM Mirage, Adelson's Las Vegas Sands and Wynn Resorts all responded positively to the news, ditto Melco PBL. None of them will be able to add so much as one slot machine or table to their existing casinos under Ho's decree, but those companies (and Galaxy Entertainment and Stanley Ho) will probably all gladly swallow that in return for a protected market.

Projects in progress, and land grants to Wynn and MGM, are expected to go ahead as scheduled. (Exactly how many in-progress casinos will be grandfathered is presently unclear.) Macao's government likes to make casino operators squirm, but usually comes through at the last minute.
Ho cited social unrest in Macao as motivation for his status quo policy, although a Sunday Dow Jones report laid down an ominous forewarning: "officials of the State Information Centre complained there was US$80 billion of capital unaccounted for in the first quarter." If Peking thinks Macanese megabucks are already slipping through its fingers, it's not likely to smile upon new entrants into the market.
The article also cautioned that the battle for junket customers was volatile --Wynn might lose one of its junketeers -- and cut deeply into casino earnings. (On another note, did you know that a Hello Kitty casino is planned for Macao? I didn't.) But, as MacauTripping.com points out, those who already own casino-enabled acreage in Macao can hunker down as that real estate escalates in value and potential buyers come calling.
The big loser. Pundits agree it's Harrah's Entertainment. The company wagered its hopes on a new round of concessions. "It looks like their investment into what they hoped to become Caesars Cotai just turned into ... a golf course," quoth blogger Chuck Monster. Both he and TheStreet.com's Nicholas Yulico identify Galaxy and -- more likely -- Melco PBL as attractive takeover targets, but note that the situation will inevitably be complicated by Harrah's already-staggering debt load.
Barring a massive sell-off of Harrah's assets, it's difficult to see how Texas Pacific and Apollo Management could swing the additional billions necessary to buy their way into Macao. But they're probably crunching the numbers, figuring out how to make it work, this very minute.
Sad But True Dept.: With the exception of Sunset Boulevard, Andrew Lloyd Webber hasn't had a breakout hit in 20 years. So what's next? A sequel to Phantom of the Opera ... set in Coney Island? And, no, it's not a joke. But the notion of a deformed, deranged composer playing madly upon a calliope just doesn't strike the same note of menace.
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