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January 18, 2017

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How Sheldon Adelson lost $3 billion in 30 minutes

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Patrick Semansky / AP

Las Vegas Sands CEO Sheldon Adelson and his wife, Miriam, wait for the presidential debate between Hillary Clinton and Donald Trump at Hofstra University in Hempstead, N.Y., Monday, Sept. 26, 2016.

Las Vegas Sands Corp. owner Sheldon Adelson got a crash course Thursday on the fragility of owning a publicly traded company based on Macau's volatile gambling market.

Adelson lost more than $3 billion in less than an hour, after word came from Macau that the government was reducing by 50 percent the amount of money people can withdraw from one of Macau's largest banks.

What may seem like a harmless banking change was seen by investors as further government crackdown preventing Chinese high-rollers from transferring their money out of the mainland to gamble it at Las Vegas Sands' casinos in Macau.

So, when newspapers began reporting that daily withdrawals from UnionPay ATM was being reduced from 10,000 patacas to 5,000 patacas ($626), the stocks of companies with casinos in Macau plummeted. Las Vegas Sands' stock dropped from $62.74 to about $55 in just a few minutes, instantly lopping $3.2 billion from CEO Sheldon Adelson's personal fortune, Bloomberg reported.

Macau casinos, now pulling in four times the revenue of casinos in Las Vegas, thrive off high-rollers from China, who take gambling junkets to Macau. However, there are limits to how much money they can leave mainland China with, so they've been able to use Macau ATMS to get money out, analysts said.

"We know that there are individuals who specialize in utilizing hundreds of ATM cards on any given day to withdraw cash and provide liquidity to junket agents and some premium mass players. This is where a slightly greater impact could be felt," Vitaly Umansky, a global gaming senior research analyst at Sanford C. Bernstein in Hong Kong, wrote in an industry note on Friday.

"Nearly 50 percent of Chinese customers in Macau use UnionPay ATM withdrawals as one source of cash for gaming."

No one need shed tears for Adelson. Even after the loss, his fortune was estimated to be nearly $29 billion. That still keeps him in the top 20 for the world's richest people.

And as of Friday morning, Las Vegas Sands stock had begun to rebound.

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