Inside Asian Gaming

INSIDE ASIAN GAMING | September 2010 18 6 (5) Lawrence Ho Yau-lung Co-Chairman and CEO Melco Crown Entertainment 7 (7) Kazuo Okada Chairman, Aruze Corp Vice-Chairman, Wynn Resorts mainly located in suburban areas of Macau. Mocha is now part of MPEL. The departure of Messrs Hawkins and Dewhurst—two appointments from the Crown side of the MPEL joint venture—and the introduction of junket marketing more in the style and manner of Dr Stanley Ho’s casino operating company, Sociedade de JogosdeMacau(SJM),onthegamingfloorsat CoD suggests the operational management of MPEL is becoming ever more localised. That might be considered no bad thing by investors, given that the MPEL properties are overwhelmingly serving Chinese customers and CoD has been somewhat laggardly in tracking the general growth of the high roller market in Macau this year. WynnandLasVegasSandsCorphavealso worked with junket operators traditionally linked with Dr Stanley Ho, so the recent changes at MPEL should not be overstated. The fact that Mr Ho is related by blood to Dr Ho inevitably leads to speculation, however, that closeness to SJM partners equals cosying up to SJM itself. This may be a wrong assumption, but ‘guilt by association’ is a familiar experience for the Ho family, as witnessed in the findings by New Jersey state investigators against Pansy Ho. Given the deep roots of STDM and SJM in the Macau gaming market, the concern in some quarters is that joint ventures such as MPEL could morph into fronts for Ho family interests. It is worth noting that James Packer, head of Crown Casinos and MPEL’s other Co-Chairman, didn’t even attend the first anniversary celebrations for CoD in June. If Western money is merely seed capital to support the establishment of new gaming operations later fashioned in the image of STDM/SJM, then what was the point in regulatory and consumer choice terms of introducing ‘competition’ to the Macau market in the first place? That’s the thinking of some sceptics. That sentiment takes on greater significance given that Lawrence Ho’s name has inevitably been mentioned in relation to the issue of leadership succession at SJM following the five-month hospital stay by 88-year-old Dr Ho late last year. Lawrence Ho is something of an enigma, despitebeingoneofMacau’s leadinggaming entrepreneurs. He seems less assured in public speaking than his half sister Pansy, rarely making unscripted remarks and only occasionally taking ad hoc questions from journalists at press conferences. That’s not to say Mr Ho is incapable of effective leadership. He has displayed evidence of the ruthless streak necessary in business by overseeing the operational management shake up this summer at his joint venture casino operating company, Melco Crown Entertainment (Nasdaq: MPEL). In came Mr Ho’s protégé, the local Chinese executive Ted Chan, to take a position titled Co-COO of Gaming at City of Dreams (CoD), the company’s flagship gaming resort on Cotai. Out went Westerner Greg Hawkins, the President of CoD, followed soon after by Simon Dewhurst, the Chief Financial Officer of MPEL. Mr Chan was first talent spotted by Mr Ho when he was appointed to run what was originally the purely Melco-owned Mocha Clubs, a chain of locals-focused slot parlours Aruze Corp has had an exciting year with the emergence of its slot and multiplayer casino products as major competitors on the world market. Games such as Lucky Sic Bo and Rock You Queen from its equipment subsidiary, Aruze America, have taken the Macau market by storm. Lucky Sic Bo was overwhelmingly voted ‘Best Multiplayer’ by industry executives in Inside Asian Gaming’s Supplier Awards 2010. Mr Okada built his fortune on Aruze’s success in the Japanese pachinko and pachislot machine manufacturing markets. The gaming machines using steel balls are one of Japan’s most popular forms of entertainment and Aruze is the second largest manufacturer of them. Over the years, Aruze (formerly Universal Distributing) expanded into the production of other electronic gaming machines, amusement machines and video games. Mr Okada is also a major shareholder in Wynn Resorts. The opening in April of Encore at Wynn Macau, the VIP focused extension to Wynn Macau, and the announcement in June that Wynn is planning a second Macau property—this time on Cotai—is likely to further improve his fortunes and those of his gaming businesses. SteveWynn’s relationship with Mr Okada began in 2000 when the former was looking for new financial backers to open Wynn Las Vegas. Mr Okada answered his call with a substantial investment that netted Aruze the single largest stake in Wynn Resorts— currently standing at 21.8%. The up-ward trend in Wynn’s stock price contributed to Mr Okada regaining the mantle of self-made billionaire—with an estimated net worth of US$1 billion in 2010, compared to US$900 million last year, according to Forbes’ Japan’s Richest list. Mr Okada ranks in 26th place on that list at the youthful (by Japanese billionaire standards) age of 67. Mr Okada’s alliance with Mr Wynn could bring new benefits for both men if Japan ever legalises casino gaming. More problematic for Mr Okada are his investments in the Philippines. The company has already located its regional manufacturing operation there and is set to make a major spending commitment by building a casino resort at Manila Bay. Behind the scenes, Mr Okada will want assurances that his planned casino venture will actually be welcomed by the country’s political leadership. The new president, Benigno Aquino, seems at best lukewarm about the existence of land based casino gaming and has placed a moratorium on further expansion of land based operations within the country. Recent reports from the Philippines suggest the new government will honour a so-called‘midnight deal’betweenAruze and the previous administration allowing Aruze title to the land on which the casino resort is