Inside Asian Gaming

INSIDE ASIAN GAMING | May 2009 30 S ince 2002, when the Macau government announced in advance the end of Dr Stanley Ho’s casino monopoly in the territory, many commentators have been predicting a slow but inevitable decline in the power and influence of Dr Ho and his casino operating company SJM Holdings Ltd. But as Inside Asian Gaming reported in July last year in our piece ‘Many Happy Returns’—concerning SJM’s flotation on the Hong Kong stock exchange—not only has SJM’s profitability been relatively resilient, but also its market share has been holding up in rising market. In the first quarter of this year, according to unofficial figures published by the Portuguese news agency Lusa—but normally attributed to sources at Macau’s gaming regulator, the DICJ—SJM held 30% of the Macau gambling market, up from 26% for 2008. At the same time, SJM has steadily been planning to increase its market coverage with modestly priced but important new projects due to open in the next 12 to 18 months. They include Oceanus—a mainly mass-market casino near the Outer Harbour. Not only does it boast an impressive pedigree with design input from award winning casino architect Paul Steelman—crucially it is closer (within walking distance) to the Macau Maritime Terminal ferry port than LVS’s mass market offering Sands Macao. Cost control SJM has also avoided getting loaded with the kind of development costs that are currently proving to be such a burden for the foreign investors. In any case many foreign analysts have tended to underplay the fact that Dr Ho, his family and his companies are in the DNA of Macau. Not only does Dr Ho have a casino operating licence and a stable of wholly owned and managed SJM casino properties—he also has the right to offer his licence coverage to independently managed casinos. This is a licence to print money all by itself, as SJM receives fees for this service from the casino managements with little or no commercial risk to SJM itself. Dr Ho also has a long association with the people who bring in VIP players from Hong Kong and the Chinese Mainland to his and now other people’s casinos. In the past that was a handicap for Dr Ho when he sought to expand his gaming interests internationally. Some of the old-style betting agents were previously considered uncomfortably close to organised crime. Now that the world has The Empire Strikes Back SJM’s offer to help LVS and itself on Cotai could be good news for the whole Macau market Cover Story