Inside Asian Gaming

August 2015 inside asian gaming 17 In Focus sized enterprises, featured in the food and entertainment offerings. SJM remains Macau’s closest thing to a local gaming concessionaire, inheriting and expanding the properties and cachet of its founder Stanley Ho, who ran Macau’s gaming monopoly for 40 years through its parent company, privately held STDM. Mr Ho, part of a celebrated Hong Kong family who came to Macau during World War II and married into a well-connected local family, stepped down and distributed his holdings in 2011, but the company remains largely of his making, headed by top lieutenant Ambrose So and Angela Leong, known as Mr Ho’s fourth wife and a Macau legislator. The legacy of Mr Ho, 93 and confined to a wheelchair, lives on beyond SJM. His son Lawrence is co-chairman and CEO of concession holder Melco Crown and his daughter Pansy Ho is an executive director of concessionaire MGM China Holdings and its largest individual shareholder. FLOWER POWER Pansy Ho could help steer the future of concessions in Macau. She was the guiding force behind an attempt to strip Mr Ho of his assets and cut out Ms Leong nearly five years ago. The family’s agreement to divide Mr Ho’s holdings reached in early 2011 gave Ms Leong shares in STDM and made her the largest individual shareholder in SJM while guaranteeing her position as SJM managing director until 2017. The agreement also made Ms Ho a director of STDM and gave her 3.77% ownership through her mother, Stanley Ho’s second consort. Prior to MGM China’s June 2011 Hong Kong public listing that lowered her stake from 50% to 29% and netted her nearly $2 billion, Ms Ho and MGM signed a non-compete agreement that allows her to serve as a director of both MGM and STDM, as well as managing director of property developer, hotel owner and ferry operator Shun Tak, another company founded by her father. The agreement says that if Ms Ho and her associates take control of SJM, she would have to reduce her stake in MGM to below 20%. But if Ms Ho does make a successful move on SJM, Macau regulations would be more stringent, requiring her to reduce her stake to below 5%, according to sources familiar with Macau regulations. Some believe that her seats on the boards of two operators already break the rules and Macau would simply “fudge” the control issue, too. Strict enforcement of Macau’s regulation would, however, give Ms Ho incredible leverage. Even at deflated current prices and with Ms Ho having sold down her stake to the mid-20s, it would cost MGM close to $2 billion to reduce her holdings below 5%. MGM could find itself compelled to reach some accommodation leading to it operating under SJM’s license and Ms Ho’s control. That scenario would allow Macau authorities to eliminate a concession and appear to exert more control over the gaming industry without actually changing anything. It would also be déjà vu: MGM originally planned to operate under SJM’s concession but got an independent subconcession when Mr Ho sold it to his daughter for $200 million, $700 million less than Melco Crown paid for its concession from Wynn Resorts. The US-linked concessionaires—MGM, Las Vegas Sands subsidiary Sands China and Wynn Resorts subsidiary Wynn Macau—give Macau officials food for thought. When deregulation began, US casinos’ brand names lent Macau credibility. Moreover, their integrated resort development experience and access to capital produced world class properties that operators across the region emulated. But even US casino companies haven’t managed to put Macau on the global tourism map or develop the convention sector, as local authorities hoped they would. The legacy of Stanley Ho, 93 and confined to a wheelchair, lives on beyond SJM. His son Lawrence is co-chairman and CEO of concession holder Melco Crown and his daughter Pansy Ho is an executive director of concessionaire MGM China Holdings and its largest individual shareholder. “Sands built up Cotai and delivered what the government wanted. It wouldn’t be the same Macau without them,” the executive says. “They’ve also been the most antagonistic.”