Why Trump Megadonor Sheldon Adelson Could Benefit From A Biden Presidency

^There’s no question who Sheldon Adelson, the billionaire chairman and chief executive of the largest casino operator in the world, supports for president of the United States. Adelson and his wife Miriam have spent at least $180 million—a record-breaking sum—to back President Trump and the GOP ahead of this year’s election.

But Adelson’s political donations might undermine his business interests. In 2019, Las Vegas Sands generated 60% of its profit (measured as earnings before interest, taxes, depreciation and amortization) from its five casino-hotels in Macao, the autonomous region belonging to China and one of the most lucrative gaming markets in the world. About 30% came from Singapore, where it has one property, while only 10% of the company’s earnings originated from its iconic properties on the Las Vegas Strip.

Las Vegas Sands is exploring a sale of its three Vegas venues, the Venetian, the Palazzo and the Sands Expo Convention Center, as Bloomberg News first reported Monday. A person with knowledge of the discussions said the company is hoping to fetch “in excess” of $6 billion. If the sale were to go through, Trump’s most significant political donor would be an American businessman wholly dependent on Asia. According to Morningstar analyst Dan Wasiolek, that means Las Vegas Sands would likely do better with Biden. 

“For Sheldon, the most important thing to him is the relations he has with Asian governments,” says Wasiolek. “How does leadership in the U.S. government come in and impact the relationships Sheldon already has?”

In mid-2022 gaming licenses will be up for renewal in Macao, and Trump’s tough-on-China approach could lead to heightened tensions between the two nations. The tensions could put pressure on Las Vegas Sands’ gaming concessions negotiations with China.

“A Trump victory could increase the level of uncertainty around the costs of these gaming concessions being renewed,” says Wasiolek. “If there is a trade tension between [the U.S.] and China, and those get elevated and things go more towards protectionism, China could decide to use the renewal process of these gaming licenses [to] play hardball. These licenses are obviously important [to Las Vegas Sands].”

^There is little risk that Las Vegas Sands wouldn’t get its gaming license renewed—Macao’s economy relies on gaming, and Sands is an experienced operator—but Chinese authorities could make the licenses more expensive or drag out negotiations. A rash of negative headlines could spook investors and lead to stock price volatility, Wasiolek says.

During Las Vegas Sands’ third-quarter earnings call last week, Steve Wieczynski, an analyst from Stifel, asked Adelson how a Trump or Biden victory would affect “your China relationships.”

Adelson was circumspect: “We don’t answer political questions.” Staying true to that sentiment, Las Vegas Sands declined to comment on any election-related questions for this story. Adelson is clearly aware of the risks of backing the tough-on-China president, whose policies on Israel are more in line with his thinking. In 2018, he and his wife Miriam donated $10 million to the America First Action, a pro-Trump super-PAC. But with the group running anti-China political ads this year, the Adelsons have directed their funds elsewhere.

In August and September of this year, the Adelsons wrote checks to a new super-PAC, named Preserve America, which runs ads opposing Joe Biden, claiming he’d “bury our economy” by raising taxes. 

A Deutsche Bank research note published last week, reaffirmed a buy rating for Las Vegas Sands, noting that Covid-19 and the upcoming presidential election could make business tough for casino operators with assets only in the U.S. But Sands is in a good position since its business is mostly concentrated in Asia.

Asian gaming markets seem poised to return to pre-pandemic levels faster than Sin City. According to Alex Bumazhny of Fitch Ratings, Macao and Singapore could recover as early as 2021, while Vegas won’t fully return until 2024.

“Ultimately, it comes down to the number of cases in Asia being lower, and they’re in a better position to open up the borders and allow people to travel,” says Bumazhny. “As for Las Vegas, its recovery will be largely driven by the availability of a vaccine.”

Despite the pandemic, Las Vegas Sands has said it has enough liquidity to operate in a “near-zero” revenue environment for more than 18 months. Las Vegas Sands boasts one of the strongest balance sheets in the industry and is actively investing billions of dollars in Macao and Singapore.

During an earnings call last week, Adelson made it clear where he remains most optimistic: “I remain steadfast in my belief that Macao has the potential to become one of the greatest business and leisure tourism destinations in the world.” Not exactly an America-first agenda.