Las Vegas Sands down 34% in First Quarter

The Las Vegas Sands Corp. was one of the biggest beneficiaries of Macau’s fast rise in the casino gaming world. However, based on Sands’ 34 percent revenue drop in the first quarter, it also looks like they will be one of the quickest to fall during Macau’s tumble.

What’s interesting is that Q1 2015 actually saw Sands earn a $511.9 million profit. But as mentioned before, this is a 34 percent drop from last year’s first quarter.

Nobody has been hit harder than Sands owner Sheldon Adelson, whose $38 billion net worth has now fallen to $29.9 billion. The 81-year-old admitted that his company is “sailing in uncharted territory,” but he still remains optimistic heading forward.

“I hope we don’t sink like that boat off the Mediterranean,” he said to numerous laughs during a company conference call. “We’re not sinking.”

Adelson reiterated that he has no plans to stop investing in Macau casinos and hotels, and he still sees the long-term potential in the world’s top casino destination.

One more important topic that he discussed with his Sands executives was a proposed cap on mainland China visitors to Macau. Adelson quipped that “there is no chance of this happening,” even likening it to his hair growing back overnight.

It’s little surprise that Adelson remains so bent on sticking with Macau. After all, 88 percent of his company’s revenue comes from the former Portuguese colony and other Asia-based casinos. Meanwhile, only 12 percent came from the Las Vegas Strip business, which is what initially gave rise to this company decades ago.

Despite all of the revenue that Las Vegas Sands makes from Asia, there are troubling signs in Macau. The Chinese government is still engaging in a crackdown on political and financial corruption, which has greatly affected their country’s gambling gem. Macau casinos generated $44 billion in revenue last year, but that figure is assuredly dropping when 2015 is over with.

The chief problem seems to be that many high rollers are staying away from Macau while the crackdown is happening. And this has caused continual month-over-month revenue drops in Macau. There’s no telling when the steep decline will even out, given that the crackdown is ongoing. And until the free-fall does stop, Las Vegas Sands figures to be one of the most-affected parties.