Las Vegas Sands Faces Macau Lawsuit by Marshall Hao

Las Vegas Sands Lawsuit Macau

LVS’s sub-license with Galaxy Entertainment led to the Venetian Macau, the top casino in the world’s top gaming destination.

Macau’s Court of Second Instance ruled this week that Las Vegas Sands Corp must defend itself in trial against allegations that it breached a contract related to a 2002 gaming concession in Macau.

The lawsuit, brought by Taiwanese businessman Marshall Hao, has bounced around Macau and Nevada courtrooms for years. In 2012, Marshall Hao’s Nevada-based lawsuit got big news in the United States, but US courts eventually threw out the case. Now Hao’s lawyers seek a friendlier court system in Macau.

The case involves charges by Asian American Entertainment Corporation (AAEC) that LVS joined them in a bid for a Macau casino license, only to breach the contract in order to partner with Galaxy Entertainment Group (GEG), a Hong Kong outfit.

AAEC and LVS Joint Venture

At the time AAEC brought Las Vegas Sands Corp into the Macau gaming market, LVS was strapped for cash. The eventual partnership between Las Vegas Sands and Galaxy Entertainment is arguably the most successful in history, as they are the #1 and #3 most profitable casino companies in the world’s most lucrative gaming market ever.

LVS and GEG combined to have gross revenues over $20 billion last year. In 2001, the year before Las Vegas Sands first delved into the Macau gaming market, the company had gross revenues of less than one-half a billion dollars.

Las Vegas Sands Macau Lawsuit

Macau Daily Times reports that the issue in the lawsuit is whether AAEC’s joint venture with Las Vegas Sands had expired or been renewed at the time LVS jumped ship to the Galaxy deal. AAEC had a 70% stake in the joint venture, so it would stand to gain countless billions from the lawsuit.

The joint venture had an expiration date soon after the tender was supposed to expire. At the same time, concessions were handed out after the target date, so there is a legitimate dispute about whether LVS breached the contract or not. Instead of working with AAEC, Sheldon Adelson’s corporation accepted a sub-license from Galaxy Entertainment.

Marshall Hao’s Charges against LVS

Marshall Hao wants compensation for his 70% stake in the AAEC-LVS joint venture. Hao contends that LVS breached contract in the middle of the concession process, thus damaging his own company.

Macau Daily Times has indicated the court case might hold more intrigues than at first glance. One might assume the suit simply involves a case where a fabulously wealthy corporation has been able to hold off lawsuits for 10 years, through appeals and other legal wizardry. The case may reveal long-held secrets about the early casino bidding process in 2001 and 2002.

Edmund Ho Named as Witness

Former Macau chief executive Edmund Ho has been named as a potential witness by the prosecution in the case, which is a key reason the Times believes the lawsuit might hold intrigue. Edmund Ho was the 1st Chief Executive of Macau after the handover from the Portuguese. He served in that capacity for a full 10 years, from December 20, 1999 until December 20, 2009. Ho’s political career spans back to 1986, when he joined¬†the Chinese People’s Political Consultative Conference (CPPCC).

Current Macau chief executive Chui Sai On barred Ho from giving testimony in the case, which adds a layer of intrigue.¬†South China Morning Post once described Fernando Chui Sai-on as “dour and uncomfortable in the public glare“, as well as “less charismatic” than his predecessor, Edmund Ho Hau-wah. The same SCMP article noted the two men’s families had previous business connections going back to the 1990s.

In that same 2014 SCMP article, Raquel Carvalho wrote, “Companies registry documents show that in the 1990s the sitting chief executive’s older brother, Chui Sai-cheong, formed three real estate and investment firms with Ho. While Ho divested himself of stakes in the companies when political office beckoned, recent filings show that Fernando Chui’s brother remains a director and shareholder of one of them. While Ho, the banker son of trusted Chinese government ally Ho Yin and Fernando Chui were carefully prepared to lead Macau, Chui Sai-cheong became a lawmaker representing the business community.”

When Does LVS’s Concession Expire?

The Las Vegas Sands/Asian American Entertainment Corporation trial will not start until early 2018 at the earliest. One can expect the case to undergo a variety of appeals and counter-appeals in the Macau court system, no matter who wins the early stages of the case.

Las Vegas Sands‘ 20-year sub-concession to Galaxy Entertainment Corporation expires in 2022. It has been suggested that the sub-concession might be extended in 2-year increments beyond 2022. Despite the current lawsuit, it seems unthinkable that Las Vegas Sands would lose its concession.