Sheldon Adelson on Vegas and Emerging Markets

Before the global downturn, 75-year-old Sheldon G. Adelson, Chairman of The Las Vegas Sands Corp., was the ultimate high roller. For a time America's third-richest man, he helped rebrand Las Vegas as a family spot and turn Macau into a top gambling destination with his investments. But his bet on Asia has, during the credit crunch, forced him to shore up projects with $1 billion of his own money. He talked about whales (big spenders) and sharks (like Madoff) with NEWSWEEK's Rana Foroohar and Daniel Gross in New York. Excerpts:

NEWSWEEK: HOW would you describe this moment in economic history?
ADELSON: Certainly remarkable. There are cycles in everything. But gambling will come back—it always does. The Chinese in particular are and will be prolific gamers. Not because they are addictive people, but because the concept of luck is such an integral part of their culture.

I've read there are more people coming through the doors in Macau than ever, but they are spending less money. Is that right?
Yes, we're running 15 to 20 percent ahead in terms of attendance year-on-year in Macau. But in the gaming industry, there are two components—those who gamble a lot, the whales, that could win or lose, on a night or a weekend, millions of dollars. Those people represent 60 to 70 percent of the gross income of a casino. You can still have one bet made in the high-end rooms that equals all the rest of the bets being made in the casino.

Is there a metric—GDP growth, stock-market swings, income growth—that can predict what people will spend in a casino?
No, there's no correlation. I'd express a sense of arrogance if I told you I knew. But I'd suspect that if GDP was better, and salaries were up, it would lead to more discretionary spending in the casinos. But anyway, we make more money these days on hotel rooms than we do on the casinos.

You had a record year for gaming in 2007. Will you get back to that level, and when?
Yes, we'll get back. But we need to see in Macau, for example, what the attitude of the new government will be; hopefully, restrictions preventing more travel from Guangdong province to Macau will be lifted. We're still planning a new Cotai Strip in Macau [modeled after the Vegas Strip, with malls, restaurants and tourist sites in addition to casinos].

Assuming that the restrictions are lifted, will there be anybody left with money to gamble in Guangdong? That region was among the worst hit by the downturn in China.
Of course—there are 100 million people there! Listen, China's got a big stimulus package, and they control the country unlike the way we do here in the U.S. Fifty percent of the enterprises are still owned by the government in China, so they can turn things around on a dime. And we can't do that so fast.

Do you have more confidence in China's economic recovery than in America's?
Yes. In America, rightly or wrongly, versus China, we've got all kinds of laws to pass and lots of things to contend with to get stimulus money flowing. Everyone's got their shot at lobbying, etc. Over there, they get together in a room like this, albeit about a thousand times as big, and they say, "Hey, who wants to give money to the bank?" and everyone raises their hand, not a single one doesn't, and that's it! They can control the economy a lot faster.

Las Vegas was hit terribly by the recession. Can it reinvent itself?
I'll quote Popeye the Sailor Man—I yam what I yam what I yam. Las Vegas is a city of entertainment, and that's what it is. Everyone wants to diversify. Clinics are coming to Las Vegas, and a lot of people want to change it into a medical-research city. God bless them, I hope it happens. But when we have a generic synonymity with entertainment, how can we say we're an academic breeding ground for scientists? Not in my lifetime, and not in my children's lifetime.

Casinos are capital-intensive, and capital markets have dried up. Are you hurting?
I'm still solvent—I've got a $5 billion net worth, which seems like a lot to me. I know a billion doesn't buy what it used to, but it's still a lot of money. But I'm not interested in buying [distressed casino properties] right now. My father told me when I was a youngster, "Never buy a used car—you're buying someone else's problems."

You are very active in Jewish philanthropy. What is the impact of the Madoff scandal on large-scale Jewish philanthropic efforts?
I never knew Mr. Madoff, and I never invested with him. But a lot of people were ensnared in his nets. If the time was better, the damage might have been less. But philanthropy is in the heart of the Jewish people. My wife and I have a $30 million commitment to Birthright [which sponsors trips to Israel for Jewish young people], and we're keeping that commitment.

You got rich betting on developing markets that are now tanking. Is the fundamental emerging-market story still strong?
Yes, unequivocally. These markets are going to go back up; it's only a matter of time. It's like Joseph: you've got seven years of plenty and seven years of want.

Let's hope we don't have 40 years in the desert …
Hey, I'm in the desert already—I'm in Las Vegas!

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