Inside Asian Gaming

INSIDE ASIAN GAMING | October 2010 16 Macau remained the weakest performer in terms of share of gross revenue for month after month and quarter after quarter. Only belatedly is that mistake now being rectified, with the same business associate of Dr Ho that helped out Lawrence Ho’s MPEL now doing a similar job at MGM Macau. The results are being seen almost immediately, with MGM aggressively pursuing new junket business, including opening a new 20-table facility in September for the exclusive use of one junket investor. We know what Mr Fok junior is not (i.e., not a member of the Ho family), but do we knowwhat he actually represents in terms of possible leadership for STDM and SJM? The most likely answer is that if he does succeed to one or both top jobs, he represents peace and stability. He will represent a compromise candidate that can be accepted by all the competingparties. Mr Fok juniorwill become the front man for the Ho clan, possibly with Dr Ambrose So running the business on a day-to-day basis. That potentially is a 360- degree reversal of the historical connection between these two powerful and wealthy families and a closing of a casino industry circle opened back in 1962. That, no doubt, would amuse the late Mr Fok senior and Dr Ho in equal measure. Crown Macau was effectively the price the whole of the Macau market paid for MPEL’s inexperience in those early days. The current view of some analysts is that MPEL has again been underperforming— particularly in its US$2.4 billion Cotai resort City of Dreams. Credit Suisse said recently MPEL’s second quarter earnings were “about 13% below consensus”. Nomura said it expected Melco, the Hong Kong- listed part of the MPEL joint venture, to continue to report losses in the next couple of years, adding that its share price performance“will be capped by its complex corporate structure, risk of convertible bond dilution and widening Melco-MPEL holding discount due to diminishing interest among investors.” That’s hardly a ringing endorsement for the top job in the Ho family’s core business. An added complication is that were Mr Ho junior to take on the SJM job, he might encounter regulatory complications inAustralia, where his MPEL JV partner Crown Ltd is licensed. At least one Australian state has previously declined to grant Dr Ho a gaming licence. Even with Dr Ho no longer involved in SJM, the Australian regulators may still baulk at SJM’s junket operator connections. That might mean Lawrence Ho having to choose between his father’s business and the one he built himself. Singled out The latter issue could also face Pansy Ho in relation to the SJM succession. Lawrence Ho’s half sister and his senior in terms of business experience as well as birth order, has already been singled out by the New Jersey Division of Gaming Enforcement as “unsuitable” to be a business partner for MGM MIRAGE (now MGM Resorts International) because of her family link to Dr Ho and his business associates. MGM has already given up its right to a casino operation in New Jersey in order to keep its 50:50 JV with Ms Ho in Macau. Would Ms Ho give up her US partner in Macau for the sake of taking over SJM if the Nevada regulators raised the stakes for MGM? On paper, Ms Ho looks the strongest of the three family candidates for the SJM succession. As well as owning half of MGM Macau via the JV company set up with MGM Resorts, Ms Ho is managing director of the Hong Kong-listed shipping and property conglomerate Shun Tak Holdings. Shun Tak is chaired by her father and provides ferry services into Macau from Hong Kong as well as having real estate investments on both sides of the Pearl River delta, including One Central, the luxury shopping, residential and hotel complex next door to MGM Macau. The JV has also made some mistakes. One of them was allowing the US$1.25 billion MGM Grand Macau (as it then was) to open in December 2007 with only one junket deal. A second mistake (though not one unique to MGM Macau) was to rely on mainly Western in-house marketing people to make up for that VIP shortfall, rather than engaging heavily and early on with the local junkets. With hindsight that could have been down to MGM’s concerns about US regulatory attitudes toward Macau junkets and their historic ties to Dr Stanley Ho’s gaming operations. Whatever the reasons for the policy, the result was that MGM Pansy Ho Chui-king—some catching up still to do Advertise with Inside Asian Gaming For advertising enquiries, please email: ads@asgam.com or call +853 2832 9980 Lawrence Ho—learning on the job In Focus