Casino King May Be Market's Biggest Loser

Sheldon Adelson has lost more than $16B in less than eight months.

October 27, 2008, 1:35 PM

Oct. 28, 2008— -- America's billionaire chief executives, like other investors, have watched their net worth dwindle as chaos continues to dominate the stock market. But one CEO's bet on his own company has made him one of the biggest losers.

Casino magnate Sheldon Adelson has lost more than $16.6 billion in the last 7½ months thanks to investments in his own business, Las Vegas Sands Corp. The company owns the Venetian, the lavish Las Vegas hotel and casino known for its indoor recreation of the canal-lined neighborhoods of Venice, Italy, and is also developing casino resort properties in Macao, China.

A Sands spokesman said Adelson was unavailable for comment.

According to analysis by Steven Hall & Partners, a compensation-consulting firm in New York, Adelson's investments in Sands Corp. plunged $16,640,655,613 in value between Dec. 31, 2007, and Oct. 17 of this year.

"He's in the gaming business. He's gamed it all the way up and down," said Pearl Meyer, a senior managing director with the firm.

The investment losses by Adelson, 74, who was named the world's third-richest CEO earlier this year by Forbes magazine, dwarf those of fellow big-time CEOs like Warren Buffett, Rupert Murdoch, Steve Ballmer, Larry Ellison and Jeff Bezos. Of the five, Buffett, a legendary investor and the chief of Berkshire Hathaway, lost the most -- he saw his Berkshire investments plunge by nearly $9.6 billion. Media mogul Murdoch, meanwhile, lost the least, with his News Corp. holdings dropping just more than $3.9 billion, according to Steven Hall & Partners.

One of the factors behind Adelson's spectacular losses is obvious: The casino business is among the industries hardest hit in the economic slump. Shares of Sands have dropped from a 52-week high of $148.76 to, most recently, below $6.

But there's another reason that Adelson is grappling with an 11-figure loss: His gamble on his casino business is an especially large one -- he owns at least 52 percent of Sands. By comparison, Buffet's holdings in Berkshire amount to a 28 percent stake in the investment company while Ellison, the CEO of the software company Oracle, has a 22.6 percent stake in his.

Adelson "has a very large stake which he has maintained so that his upside was very significant -- as his downside," Meyer said.

Is Ego Behind Casino Mogul's Loss?

Why does Adelson have such an out-size stake? Steve Fischer, the author of the 2005's "When the Mob Ran Vegas" and the upcoming "Showgirls' Stories," said it's about ego and control.

"Sands him," Fischer said. "He thinks of Sands Corp. the same way he thinks about himself -- there are no other decision makers."

A shrewd businessman and "a tough cookie," Adelson is still approachable, Fischer said.

He's just, Fischer explained, "a very pleasant man in a $4,000 sport jacket."

But Adelson doesn't just spend a lot on clothes. He's known for making sizable contributions to charitable causes, including to various Jewish organizations, as well as to the Republican Party.

"[W]e remain deeply committed to issues such as drug addiction, medical research, children's education and…important economic policies like free trade and low taxes," Adelson said at a recent reception where he received an award for corporate citizenship by the Washington, D.C.-based Woodrow Wilson Center for Scholars.

"When you hear about contributions being made, Sheldon Adelson's name is usually on the list," Fischer said.

Rags to Riches?

The son of a Boston cabdriver, Adelson came from humble beginnings. In interviews, he's joked that he can't describe his life as a rags-to-riches story because his family was too poor to own rags.

An Army veteran, Adelson made part of his fortune in the trade show business. He developed Comdex, which, in the 1990s, was the world's largest computer show. He sold that company in 1995.

He got into the casino business in the late 1980s, when he bought the Las Vegas property housing the Sands Casino, known as a favored haunt of Rat Packers such as Frank Sinatra and Sammy Davis Jr.

Despite its storied past, the Sands was struggling at the time of Adelson's purchase. It couldn't compete with newer, flashier hotels.

By 1996, Adelson began attacking the Sands' woes: He demolished it. That year, the hotel was imploded to make way for a new hotel and casino complex. Three years and $1.5 billion later, the Venetian opened. Its indoor shops and canals were said to be inspired by Adelson's honeymoon in Venice with his second wife, Miriam.

"It's absolutely beautiful," Fischer said. "You can't complain about the money that he spent there."

Less picturesque, however, was Adelson' relationship with fellow Vegas mogul Steve Wynn. Both men, he said, have purchased parking lot properties that the other had wanted. As a result, some of their employees have to park relatively far away from their respective hotels.

"I would assume they go out of their way to annoy one another," Fischer said.

Adelson has also been involved in various lawsuits, including one filed against him by his two sons over a stock deal. The court eventually ruled in Adelson's favor, finding that "Adelson, although perhaps lacking paternal kindliness and, indeed, cordiality generally, did not mislead, cheat or defraud" his sons.

As with other casino operators, Adelson's gambling future remains uncertain. He's seeking to raise $2 billion from Asian banks to finance his Macao developments, according to published reports. He also recently invested an additional $475 million in Sands but the move did little to bolster the sagging share price.

However badly his company is hurting, however, Adelson himself seems to be doing OK -- he's still worth $11 billion, according to Forbes magazine.

As for that latest $475 million investment? He told The Associated Press that it "hasn't changed my lifestyle."

ABC News' Melissa Lenderman and Barbara Paulsen contributed to this report.