Inside Asian Gaming

inside asian gaming September 2014 44 It’s the Philippines where Mr Lam’s most audacious investment is located. His sprawling Fontana Leisure Parks complex, a holiday getaway located in the Clark Special Economic Zone about 80 kilometers north of Manila, has grown to become Jimei’s flagship—a collection of family-style holiday villas and timeshares, a hotel, a water park, golf courses, fitness facilities, a sauna and spa, restaurants, meeting and convention space and a boutique casino—a leisure city within a city, catering both to locals and to a Chinese and Korean clientele that Jimei has come to know intimately over the years. Fontana marked its 10th anniversary in April. Mr Lam was born in Guangzhou and moved to Hong Kong at the age of 18. He started out as a bookkeeper at an uncle’s factory, earning HK$1,000 a month. He got his introduction to gaming through his uncle, who gambled regularly in Macau. While accompanying his uncle on trips to the city’s casinos he built up a network of contacts and started working as a junket sub-agent, a position that gave him insight into the nuts and bolts of building and maintaining customer relationships. By the early 1980s, he was working as a small-time junket representative in Macau. Through diligence and a solid understanding of his clientele, he gradually emerged as a leader in the industry. Sonny Yeung is raising his stakes in mainland China’s fast- growing lottery sector while withdrawing from his investment in an underperforming Hong Kong-based casino cruise ship. Mr Yeung’s Hong Kong-listed Success Universe Group, best known for its 46.8% share of Macau casino resort Ponte 16, inked a deal in March to provide telephone sales services to the Shanghai Welfare Lottery Issuance Center. Shanghai is the fourth mainland location Success Universe has landed since it got involved in the China lottery sector in 2012. It also supports sales of the Sports Lottery in Heilongjiang, Jiangxi and Qinghai provinces and operates an online lottery sales platform. Mr Yeung, who served as a member of the Chinese People’s Political Consultative Conference for 20 years until 2013, is optimistic about his lottery investment, as well he should be. Total sales of China’s Welfare and Sports lotteries stood at RMB178.4 billion (US$29 billion) in the first half of this year, up 19.2% from the same period in 2013. Mr Yeung, a half-brother of Macau casino investor Albert Yeung, expects Success Universe’s lottery division will record its first profit this year. Turnover reached HK$70.6 billion last year ($905 million), up more than sixfold from 2012, with its loss narrowing to HK$13.4 million from HK$21.9 million. The division will become “another driving force” of Success Universe’s profits, says Mr Yeung. Ponte 16, one of Sociedade de Jogos de Macau’s 14 “satellite” casinos, is 51% owned by SJM, with Success Universe acting as the third-party promoter, effectively controlling most of the business. The property got off to a sluggish start following its February 2008 opening but has recorded continual improvement in its operating results since then. It recorded its first profit in 2011, and last year saw EBITDA increase by 19% to HK$387.3 million. Ponte 16’s trademark attraction is Asia’s first and only Michael Jackson museum, which records the milestones in the King of Pop’s career and displays a collection of more than 40 artifacts (including the famous rhinestone-encrusted glove MJ wore the Sonny Yeung Chairman Success Universe Group first time he performed the “moon walk” on American television). The property’s other major non-gaming draw is its unique location at Macau’s Inner Harbour. It’s a somewhat rundown neighborhood but it offers easy access to the city’s UNESCO World Heritage sites. Part of its remit, in fact, is to revitalize the surrounding area. Best of all, it cost only HK$2.4 billion to build (US$310 million at current exchange rates), a modest sumby contemporaryMacau standards. Construction of the third phase of the resort, originally scheduled for completion this year, has yet to commence. The latest word from Success Universe is that the expansion— which will add a waterfront shopping arcade with a total floor area of approximately 40,000 square meters, including space for the expansion of gaming areas and car parks—is still being reviewed by the Macau government. Meanwhile, the company announced in July that it had entered into a memorandum of agreement to sell its 55% interest in its Hong Kong-based cruise ship operation for HK$93 million. Profit generated by the M.V. Macau Success has been plunging, from HK$7.8 million in 2011 to $500,000 in 2013 on the back of spiraling operating costs. Mr Yeung’s formative gaming experience was as a VIP room operator at Stanley Ho’s Casino Lisboa. Their relationship paid dividends when he was able to broker the investment deal with Mr Ho for Ponte 16, and Success Universe now deals to VIPs in its own rooms. He keeps a relatively low profile in the operation, and his nephew, Hoffman Ma, the company’s deputy chairman, is the public face. Mr Ma told the Hong Kong Economic Journal in August that Success Universe will actively seek its own gaming license when the government begins reviewing its gaming policies next year.