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Macau casino scion rolls dice on Japan venture

Wednesday, October 04, 2017

HONG KONG (AFP) — Casino magnate Lawrence Ho — son of Macau gaming legend Stanley Ho — is eyeing a major foray into Japan as he seeks to broaden his family's reach beyond the world's biggest gambling hub.

His father was credited with transforming Macau from a sleepy Portuguese outpost to a gaming boomtown boasting revenues surpassing Las Vegas.

With its myriad shimmering palaces to fortune and fantasy, the city is the only part of China where casino gambling is legal and has become a favourite haunt of mainland high rollers.

But the younger Ho, whose casino-to-resorts firm Melco International rivals his father's gaming empire, is keen to strike out beyond familiar family turf with plans for a major investment in Japan's untapped casino market.

The 40-year-old, with a net worth put at US$2.6 billion by Forbes earlier this year, has already broadened the firm's international footprint with casino resorts ventures in the Philippines and Russia.

He is now squaring up to crack into Japan's gaming industry after strict bars on casinos were lifted last year.

“Nothing will hold me back there,” he told AFP.

Japan already has an appetite for other forms of gambling, including horse and boat racing and pachinko, a slot machine-style game that is played in thousands of smoky parlours and is a huge revenue generator.

Fears over gambling addiction and organised crime were swept aside as the country passed a controversial Bill to legalise casinos in 2016, a move seen likely to ignite the gaming market in the world's third-biggest economy.

Ho promised an ambitious pitch for the coveted casino licence.

He has already sought to diversify his Macau offerings in recent years, as the industry came under pressure from a slowdown in the Chinese economy and a corruption crackdown by Chinese President Xi Jinping that curbed high spenders.

Operators scrambled to bolster their mass market appeal to offset a dramatic drop in revenues from the VIP sector.

Ho's Studio City built the world's first and highest figure-of-eight ferris wheel, and launched it with a star-studded fanfare in 2015 featuring actors Robert De Niro and Leonardo DiCaprio.

Other attractions in Melco's City of Dreams include a theatre that holds 3.7 million gallons of water for aquatic-themed performances and a now-cancelled cabaret show which he “personally loved” but “wasn't well understood” by mainland customers.

 

40-YEAR MONOPOLY

Hong Kong and Macau have for years been dominated by a handful of corporate clans, who amassed staggering wealth and were instrumental in galvanising the cities' vibrant economies.

But an ageing generation of pioneering patriarchs is fading from view as their progeny take the helms of family firms and steer them into new areas.

Stanley Ho, 95, is largely retired since a serious fall in 2009 that left him requiring brain surgery.

The flamboyant entrepreneur has said that he has never wagered a bet, even while his casinos raked in US billions in revenues annually.

At the Forbes Global CEO Conference in Hong Kong Wednesday his son lauded the elder businessman for having “revolutionised” the industry.

But Lawrence Ho said his father lacked the motivation to keep growing — an aspect where their philosophies diverge.

Las Vegas stalwarts including tycoons Steve Wynn and Sheldon Adelson only entered the Macau market in 2002 ending his father's decades-long grip on the city.

“My father was super lucky to have a monopoly for 40 years, but the Macau government wanted to open it up to competition. It was the right decision,” he said.

Ho does not keep the criticism in the family however, calling competitors “very Western” and stuck in the past.

“Some of the things that the industry does are literally the same things they did in the 1960s,” Ho said.

“Sheldon Adelson thinks of Macau as a vending machine placed in a gas station.”

 

DOORSTEP OF CHINA

Macau has seen a recovery in casino revenue in the last year with a strong VIP-sector propped up by mainland high rollers.

But the semi-autonomous peninsula is under pressure from Beijing to diversify away from gambling.

China has halved the cash machine limit for UnionPay cardholders visiting the gambling enclave in an effort to curb massive capital outflows caused by the falling yuan.

Ho says he is confident that his casino licence, set to expire in 2022 along with other operators', will be renewed.

Melco International is now worth US$4.36 billion in market capitalisation, and Ho said that Macau would continue to be the lynchpin of his business.

“Macau will always be the best integrated resort gaming market in the world because it's on the doorstep of China,” he said.