When Sheldon Adelson passed away yesterday at the age of 87, tributes poured in from around the world. After all, Adelson was a visionary who fundamentally changed how you did business in the gaming industry. But he was a successful businessman long before he started his gaming empire, and his philanthropy and support of causes close to his heart were legendary. His COMDEX computer equipment trade show was the largest in the world in the 1980s, which led to his purchase of the Sands in Las Vegas and the construction of the Sands Expo Center. This interview was the first time he revealed he was opposed to online poker and online gaming. Adelson spoke with GGB Publisher Roger Gros for the cover story of the January 2013 edition of GGB. Here’s a few excerpts from the interview.
GGB: Why did you decide to enter the gaming industry?
Sheldon Adelson: COMDEX was growing too fast, and the governmental authority was taking too long to give approvals to expand the convention center. COMDEX quadrupled in size in the first year and within a few years, had expanded to 10 different locations. So I decided that I had to consolidate those locations, and I would build my own convention center, which is what I did—it’s now called the Sands Expo and Convention Center, and I built that in 1990.
But in looking for the land, I realized that the best bet for me was to get a hotel property, where the functions were synergistic with the convention center. The rooms, the ballrooms, the hospitality suites, etc. And people could stay in the hotel and attend the convention. I couldn’t find a piece of land that made any sense. So I decided that we would make an adjacent hotel successful, and entrepreneurs are not in the business of making other people successful, so owning the hotel as well made sense.
So that’s what I did. I bought a hotel that had enough land to build a convention center—over a million square feet or more. And that’s how I got into the hotel/casino business. Now, we had somebody else run it in the beginning. One of my partners knew somebody who could run it, Henri Lewin. He’s since passed away. And I went to Henri, and he ran the property. And that was it. That’s how I got to the casino business.
Your COO recently talked about the percentage of revenue you get from non-gaming amenities at the Venetian and Palazzo of 70 percent of total revenues. How did you achieve that?
I taught Las Vegas that money is fungible. Money can be made in non-gaming amenities, and still be the same as the money you make from gaming. But I saw the handwriting on the wall because as legalized casinos expanded into 30 states, either Native-American casinos or commercial casinos, I realized that it wasn’t going to grow like everybody thought it was going to grow. It will still maintain its mystique, its character, and from my standpoint, but we made a lot more money on non-gaming than we did on gaming.
When you went into Singapore, most people thought it would be a difficult operation because the government refused to allow junket reps, which provide the lion’s share of VIP revenue in Macau, to operate. Why didn’t you feel that would be a problem?
I was the guy who said, “Don’t worry about it.” I had reason to believe that the concept of face in Asia will force the people to pay their debt because of what the consequences will be if they get embarrassed and lose face. Everybody said to me, “That’s just an old wives’ tale. It is not going to apply.” Everybody has come back to me and said, “You were absolutely right.” This was a major, major decision. And I felt completely confident making that.
The model that you have established in Singapore is now being eyed by so many countries in Asia. Obviously, you’re interested in all the opportunities there—Taiwan, Korea, Vietnam and others. Do you have one that is at the top of your list, that you want to get in there?
Japan is obviously the crown jewel.
People say Japan is the crown jewel, but I have to tell you, the propensity to play appears to not be like the Chinese. I’m not an expert on that but one thing that is very obvious about Japan, there are 15,000 pachinko parlors, the equivalent of a slot parlor here. There were 5 million machines, and I think there’s about 4.5 million left. There’s one machine for every 25 human beings. That counts babies and old people in nursing homes, so if you narrow it down to the demographic bracket that we’re looking for, there’s probably one machine for every 15 people. Now, the only difference between them and the casino legalization we’re looking for, is that instead of getting paid in trinkets—a wallet, a pen, a mug, a picture frame—you get paid in cash.
What is it about an integrated resort that makes them so appealing to Asian governments?
We have a convention-based marketing strategy. I want to fill up the mid-week rooms at weekend prices, and the only way to do that is to do conventions. We know conventions better than anybody, and we created the concept of marrying all these amenities together, with the shopping, and the shows, and the casino, and the spas. And oh, did I mention the casino? I forgot the casino.
What about Florida? There’s a lot of talk that Miami will have three integrated resorts. Can it handle three?
No. Listen. Everybody talks about Miami, Steve Wynn talks about, and now that he and I are talking again, we discussed this. Can it be a competitor to Las Vegas? And now Genting is throwing so much money around. They’ve got 65 lobbyists. We have two. And they make exaggerations like three properties will employ 100,000 people. They’re making exaggerations that we’re disowning. We would bring 7,100 rooms there—the equivalent of two IRs. Two destination resorts, as they call it. And we only 7,000 or 8,000 people. How are they gonna put one more, half again, and employ 100,000 people? Now, these are exaggerations that are way off the charts. They’re losing credibility fast in Florida. And besides, the law says that if they do anything wrong, and they go back to Malaysia, they have to waive extradition defenses. So they can be called back if they break any laws. They don’t like that.
If we put them all together—a long strip—you could have three or more. But if you just located them individually, I don’t think so.
What about Massachusetts, the state where you were born? They just passed casinos there. Will you be interested?
Yes and no. The local scuttlebutt is that Suffolk Downs is being pushed by the mayor of Boston. And the head of the House is from Winthrop, which is right next to Suffolk Downs.
I’m born and raised in Boston; I still live around there. In Newton, actually. Knowing Massachusetts like I do, I believe the best location is at the junction of the MassPike at 495. That way, I get people from the west, and I get people from downtown Boston. So we could get a very big part of Boston. I read something this afternoon that Wynn made a deal with my friend Bobby Kraft for Foxboro. But Foxboro already turned it down in a referendum. It’s not the right location, because the southeast is the zone that’s given to the Mashpee Wampanoag Indians.
I want the Boston license, but I don’t think we can get the Boston license because politically whoever’s going to award the locations, and they want to do the right job and award it on the basis of what it’s gonna do for the state, they would give it to us. But if they’re going to award it politically, it will probably go to the owners of Suffolk Downs. I agree with Governor Deval Patrick about granting racinos to the racetracks It’s a no-bid contract. Simply because you’re in the racing business, and you can get slots without a bid? From my standpoint, I agree with him. It’s a no-bid contract, and it’s just rife with opportunity for corruption. So that’s why he was very much against giving slots to the racetracks.
What is your opinion of online poker? Do you think it would help the industry at this point?
Officially, I’m neutral. Unofficially, I am vehemently against it. I may just come out of the closet and say I’m against it. And because I am convinced it’s wrong—and by the way, I’ve been a loner all my life in making decisions. And because I am a strategic thinker, and I’m looking at the strategy of this, I know that Gary Loveman thinks it’s going to save his company, but he’s wrong. PokerStars is the biggest, most successful online gaming entity in the world, and all they made was $440 million. And if you divide that up between, MGM, Caesars and all the others? It will be peanuts.
I will tell you, that I’m against it; you can’t see it from here, but there’s my two little boys running at 3 and 5. Over here, they’re 15 and 13. I see them, my little boys, get addicted to the games on TV. Will my boys get addicted to gaming? No. Because we have casinos right next to us and I won’t let it happen.
Are you afraid they’d be able to get online to gamble even though you have to be 21?
I see from my own young children that they know how to get around all the restrictions that any techie is gonna put on, preventing kids from playing. I’m concerned about children, under-aged children. I’m also concerned about people that are young adults, that are of legal age, that will get on there and start getting addicted to playing poker, because they get a lot of peer pressure from their friends. And whether or not they’re underage or not underage, I don’t think it’s good for our society. And I’m a very proud citizen of this country.
And I was talking to Ron Goudsmit, the president of the European Casino Association—the guy who runs Holland casinos. He says that it is ruining his business. That there is a significant impact on the brick-and-mortar casinos. Can he quantify it? Not when he was here for the G2E, but I said, “Give me a guess. 5 percent? 10 percent?” He said, “Yeah, at least.”
Let’s say there are 400,000 people employed by the gaming industry in the U.S. If you lost 10 percent of those people, how many are you losing?
I love this industry and I don’t want to see that happen. But there’s a difference between me and the rest of the industry. I’m an entrepreneur. I’m a risk taker. I’ve been in business 66 years, and all I do is make decisions. Now, some people will say I shoot from the hip. I mean, I do that in my own life. But I am certain about this: The people who can afford it less will be hurt the most. They will give up their money that they would otherwise occasionally go to a brick and mortar casino in favor of playing at home where it’s nice and convenient. And for certain, if it’s not just poker, it will be full casino. If it’ll be a full casino, the business as we know it today will gradually diminish, and get to the point where there’s the break even, where you start losing money. And when you’re at that point, there are a lot of companies that are going to go out of business.