I wrote recently about the woes of MGM Mirage (MGM), and it comes as no surprise that other companies in the gaming industry are also rolling snake eyes. Las Vegas Sands (LVS) is highly leveraged, with turmoil in the front office, and a tall stack of chips invested in dicey real estate development.

Controlled by majority stockholder Sheldon Adelson, Las Vegas Sands has seen its stock fall from a 2007 high of $109.45 to under $5 today. Adelson injected another $1 billion into the company last year, including $475 million that allowed the company to meet the terms of its $5 billion line of credit.

In the U.S., Las Vegas Sands' revenue from gaming makes up only 35 to 38 percent of the total. However, the 23 percent dip in revenue from the Las Vegas Strip overall in February against the same month in 2008, as reported by the Wall Street Journal, suggests a painful decline in visitors of all kinds, meaning fewer hotel rooms rented, meals served, and entertainments attended. One trend that has hurt the company is the canceling of trade and consumer shows. With 2.3 million square feet of convention space, Las Vegas Sands is heavily dependent on this traffic to fill its adjacent hotels, The Venetian and The Palazzo.

In Macau, China, the company has been hurt by change in government policy. China reduced by half the number of times a resident of the mainland is allowed to visit the casinos each year, resulting in a fourth-quarter decline of 2.5 percent. Illustrative of lowered market expectations, stock prices rose recently after the company announced that revenues from Macau had only declined six percent, March over March.

Most troubling, though, is the extraordinary amount of unfinished business on the balance sheet of Las Vegas Sands. Several large developments have been put on hold, including the St. Regis Residencies condos in Las Vegas, the Shangri-La Tower, Traders Tower, a pair of Sheraton Towers and a St. Regis hotel with 100,000 square feet of convention space in Macau, and the hotel, convention center and retail mall that are to accompany its new casino in Bethlehem, Pa. Terms of its agreement for development of the Cotai Strip in Macau require completion of some of the projects by August of 2011. Failing this could put its right to operate casinos in Macau at risk.

Las Vegas Sands is saddled with a large amount of debt, $10.4 billion at the end of 2008. It has been looking for investors to join its Macau projects, but according to the Wall Street Journal, Adelson's recent $37.4 million purchase of stock suggests that nothing promising has happened in that regard. The company is also dealing with "a significant increase in our accounts receivable." Some 57.6 percent of table play at its Las Vegas casinos is done on credit or markers. The operator of the retail Shoppes at The Palazzo, GGP, is also struggling to meet its obligation to Las Vegas Sands. The company is working on an $800 million debit buyback to provide some room under its covenants.

Not all development has come to a standstill, however. The company plans to push forward with its Singapore project, Marina Bay Sands, and completion of the Bethlehem casino.

Las Vegas Sands has been hit by a perfect storm of customer belt-tightening, the collapse of the housing market, foreign restrictions on travel, tight credit, and a drop in convention traffic. If one or more of these doesn't turn around soon, much of the visionary expansion plans cast during the heady days of the bubble equity market might end up as half-built monuments to the risks of high-stakes gambling.


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