Inside Asian Gaming

INSIDE ASIAN GAMING | July 2008 10 6 Lawrence Ho Yau-lung Co-Chairman and CEO, Melco Crown Entertainment 7 Winfried Engelbrecht-Bresges CEO, Hong Kong Jockey Club Having the family name ‘Ho’ isn’t necessarily a good thing in the increasingly internationalisedworld of gaming.It carries a certain amount of baggage,good andbad. In recent years,Lawrence Ho has firmly stepped out of his father’s shadow and is now judged in his own right. His strategic Macau gaming alliance with Australian James Packer, another son of a famous father, had a rather shaky start, but is now making headlines for all the right reasons. The operation was renamed Melco Crown Entertainment from Melco PBL Entertainment at the end of May, although the company’s NASDAQ ticker symbol, MPEL, remains unchanged. The new joint venture moniker reflects the recent name change of Mr Packer’s casino holding company to Crown Ltd. Crown Macau has grabbed a 20% plus share of Macau VIP revenue thanks to Melco Crown’s groundbreaking deal with junket aggregator AMA International. That revenue is now feeding through the balance sheet to support the capital costs of the company’s second Macau property, City of Dreams, Holdings Limited). In recognition of his excellent directorship and entrepreneurial spirit, Mr Ho was named by Institutional Investor as “Best CEO” in the Conglomerates category and won the “Directors of the Year Award 2005” awarded by the Hong Kong Institute of Directors. Mr Ho was also elected one of the “Ten Outstanding Young Persons” in 2006 by the Junior Chamber International HK in recognition of what the organisation called his socially responsible entrepreneurship. currently under construction on Cotai. Dr Stanley Ho isn’t getting any younger and an interesting question for the future is whether Lawrence Ho will play any kind of role in running STDMand SJMwhen his father leaves the stage. In one scenario discussed in Macau gaming circles but unconfirmed by the relevant parties, Melco Crown will buy SJM, take over the core properties and sell off the gaming concession to a third party looking to come into Macau. Even if this is an accuratepictureof likely events,thismagazine expects the Macau government would have something to say about the matter. Melco also owns Mocha Slots, Macau’s successful slot club operator, and US-listed Elixir Gaming Technologies (EGT), which is focused on running slot clubs on a revenue share basis around Asia. EGT has already placed or is in the process of installing over 5,530 machines in 33 venues in the Philippines, Cambodia and Vietnam, as well as aboard two cruise ships. As chairman and chief executive officer of Melco, Mr Ho oversees and is responsible for the overall strategic development, management and operations of Melco. Before heading Melco, Mr Ho worked at Jardine Fleming from September 1999 to October 2000 and iAsia Technology Limited (the predecessor of Value Convergence The man who joined The Hong Kong Jockey Club (HKJC) in 1998 and took over as CEO in February 2007 is in the corporate saddle for one of the hardest races the venerable institution has ever had to run. It’s a race against time to halt and reverse the negative effects of a slow and extended decline in the Club’s horse race betting business in the face of competition from Macau casinos and online and unregulated betting markets. The good news is that in Winfried Engelbrecht-Bresges, the HKJC is widely regarded as having chosen someone firmly up to the job. He has impeccable credentials when it comes to the core product. He’s one of the most influential figures in horseracing worldwide, serving as Chairman of the Asian Racing Federation (ARF) and Vice Chairman of the International Federation of Horseracing Authorities (IFHA)—the world’s highest racing authority. Inan interviewwith CNN ,Mr Engelbrecht- Bresges outlined the HKJC’s strategy.“We want to differentiate ourselves significantly from casinos. We want to position racing as a sport so that we can tap more into the leisure segment.” As well as being passionate about the sport of kings, he also has the vision and pragmatism to move the Club’s general sports betting offer forward. The HKJC is a monopoly but one that matters for the local community. It is the only organisation authorised to offer Hong Kong residents bets on horse races and international football matches, and also operates the Mark Six lottery. It is also Hong Kong’s largest single taxpayer, contributing an average in recent years of US$1.5 billion a year—about 10% of total tax revenue. It employs some 24,000 full- and part-time staff, making it one of the ten largest non- government employers in Hong Kong. Mr Engelbrecht-Bresges was already a senior manager at the Club when it introduced fixed odds football betting in 2003.This resulted in a dramatic fall in the use of unregulated football betting in Hong Kong and an additional US$200 million tax harvest in the 2003-04 season. Football betting revenues have risen steadily ever since. As the HKJC is a not-for-profit organisation, any operating surplus after tax goes to charity—it has donated an average of more than US$125 million each year over the past a decade. Under the CEO’s leadership the Club also maintained its strong commitment to socially responsible gambling. He also led the organisation in creating a US$125million package of venues and support facilities to enable Hong Kong to host the equestrian events of the 2008 Beijing Olympics. To ensure a successful future, the HKJC has been lobbying the Hong Kong government for regulatory changes. These include new forms of betting product, additional races and changes to the betting tax structure with the aim of ultimately making HKJC more competitive in the regional and world market and delivering higher revenues and therefore more tax yield.