In The Godfather, Michael Corleone promises his wife Kate: "In five
years, the Corleone family will be completely legitimate." Succeeding his
father Don Vito Corleone as head of a dominant but declining crime syndicate,
Michael never fulfills his pledge.
Joining a bidding syndicate for Singapore's second casino resort, Lawrence Ho,
son of Macau gaming mogul Stanley Ho, has taken a giant step toward succeeding
where Michael Corleone failed. The play for the Sentosa casino follows a
lengthy process of disengaging Lawrence Ho's Melco International Development
vehicle from Sociedad de Jogos de Macau (SJM), his father's
famous gaming company. It may be the turning point for the 84-year-old gaming
tycoon, who almost single-handedly turned Macau into a gambling Mecca.
Of course, Lawrence Ho is not Michael, and Stanley Ho is not Don Corleone.
Stanley Ho has never been charged with running a criminal empire, even though
the Hos have long been dogged by allegations of underworld ties to their
businesses that touch virtually every aspect of life in Macau, and stretch
beyond the former Portuguese enclave to property in Hong Kong as well as hotel
and gaming interests across Asia.
Push the right button
Stanley Ho's monopoly on Macau's gambling business for 40 years was frequently
at the root of those suspicions, which have been widely touched upon in various
media outlets. Stanley Ho's Macau featured smoky, dark gambling dens, VIP rooms
filled with funny money and prostitutes from around the world. It's the Macau
where gangland shootings were so frequent that the police chief once reassured
tourists that local gunmen were skilled professionals who hit their targets,
not innocent bystanders. It's the Macau Portugal tried to return to China after
its 1974 left-wing coup, and China replied, "No, thanks."
But times change. At the end of 1999, China sent Portugal's colonial
administration home and in effect ended the free-for-all among triad gunslingers.
The purveyors of socialism with Chinese characteristics decided that
competition was the best cure for Macau's doldrums, and opened up the gambling
business to all bidders. Eventually, three licenses (which became six when the
winning partnership between Hong Kong's Galaxy and America's Las Vegas Sands -
LVS - filed for divorce and Macau split the license) were awarded.
These newcomers have led an investment wave of US$25 billion, in effect
transforming Macau into a micro-Las Vegas. In September, Steve Wynn opened a
$1.3 billion scale model of his eponymous Las Vegas resort, and LVS is in the
midst of creating a $2.5 billion copy of its landmark Venetian casino, with a
1-million-square-foot (93,000-square-meter) convention center that could
accommodate all of Macau's current business meetings simultaneously with room
to spare. Six million square feet (557,000 square meters) of new retail space,
more than Macau has today, will come on line in the next three years, much of
it on reclaimed land linking Macau's outer islands of Coloane and Taipa that
promoters hope will become Asia's Las Vegas Strip.
Great expectations
The Americans expect Chinese tourists - more than 90% of Macau's projected 22
million arrivals this year will come from mainland China, with which Macau
shares a land border, Hong Kong and Taiwan - to make Macau like Las Vegas.
They're counting on casino visitors, who today mainly gamble and eat noodles,
to bring the family to shop for luxury brands, buy Cirque du Soleil tickets,
dine expensively, sleep opulently in five-star suites, and later bring their
professional colleagues back for a convention.
Stanley Ho has tried to change with Macau's more competitive times. Ahead of
his rival's Venetian casino, replete with gondolas and sampans, Ho built Macau
Fisherman's Wharf, a million-square-foot waterfront casino, retail and
convention complex, where the casino is set to open next month. Themes within
the complex include Aladdin's Fort, New Orleans, Portugal, the Tang Dynasty,
ancient Rome and a high-tech volcano. In 2001, knowing his gaming monopoly was
drawing to a close, Ho opened the Macau Tower and Convention Center. He has
also partnered in Greek-mythology- and ancient-Egyptian-themed casinos and, 35
years after his Casino Lisboa changed everything in Macau, is joining the
mega-resort trend with the Grand Lisboa rising next door.
Yet as hard as he has tried, old habits arguably die hard for Ho, the father of
17 children by four different women. Complaining to Macau reporters about
"unhealthy competition" from LVS in Macau threatening the dominant but limited
VIP market, Ho repeated in August his old mantra that opposing him is an
invitation for violence and social unrest.
"At the moment I have 150 VIP rooms. If 50 of them have to close, a few
thousand people will lose their livelihood, and then what will happen to law
and order?" Ho asked, as reported by local media. He added that if LVS
continued "pushing people to the brink, then don't expect Macau to be a
peaceful place".
Oddly, within days of Ho's public complaint a husband-and-wife pair of SJM
VIP-room executives were found with their throats cut in a car across the
border in Zhuhai province. Mainland investigators called the grizzly deaths,
Initially characterized as the first murders of Macau casino managers in a
decade, a double suicide over gambling debts. SJM would not comment on the
incident.
Meanwhile, prominent Hong Kong legislator and lawyer Albert Ho (no relation to
Stanley) was mysteriously beaten by three men in a Central Hong Kong
McDonald's. Local media said it was the most serious beating of a lawyer of
comparable stature since a 2003 attack on Mok Chiu-kuen. Oddly, at the times of
the beatings, both Mok and Ho represented Stanley Ho's sister Winnie in her
series of lawsuits over SJM dividend payments and ownership, litigation that's
blocking the group's plan for a stock listing in Hong Kong. Stanley Ho called
for police to catch the people responsible for the beatings and applauded the
arrest of five suspects last month.
Children's play
Through his offspring, Stanley Ho has reached out to Macau 's new foreign
players. His daughter Pansy Ho, who runs the Hong Kong publicly listed family
ferry and property arm Shun Tak, has partnered with MGM Mirage to build a $1
billion MGM Grand resort near the Lisboa. Under the Melco banner, Lawrence Ho
teamed up with Australia's top casino operator, Publishing and Broadcasting Ltd
(PBL), run by James Packer, son of legendary high roller Kerry Packer. Its
Macau projects included a branch of PBL's signature Crown casino resort and a
City of Dreams complex with an underwater casino, set to operate under SJM's
gaming license.
That's where Singapore enters the picture. The Melco-PBL partnership also
responded to Singapore's initial request for interest to build a casino resort
in February 2005. But in January 2006 - shortly after the death of Kerry Packer
and Singapore's unexpected announcement of a fixed $986 million land price -
the team pulled out of the running before submitting a proposal for Singapore's
other Marina Bay urban casino. It cited insufficient forecast returns and said
it had no interest in the Sentosa Island family-resort site.
Melco-PBL's new road to Singapore started with the partnership's re-engineering
in the months that followed. In March, the companies surprised the market with
a deal to buy Macau's last gaming sub-concession from Wynn Resorts. That meant
that, once acquisition was finalized, the partnership could operate its own
casinos and stop splitting the profits with SJM. The other shoe fell within
days: Stanley Ho resigned as chairman of Melco and as a member of its board,
and his son Lawrence took the top spot.
Bankable
After those moves, the Melco-PBL partnership got a clean bill of health from
regulators in Australia - where a secret New South Wales Gaming Licensing Board
reportedly labeled Ho "unsuitable" for a license. It then borrowed $1.6 billion
from an international consortium including Australia and New Zealand (ANZ)
Bank, Bank of America Securities Asia, Barclays Capital, and Deutsche Bank.
Hong Kong Stock Exchange authorities approved plans for a Melco-PBL US stock
listing last month, paving the way for a $1.5 billion Nasdaq initial public
offering and potentially earning Melco approval from two globally respected
regulators.
Teaming up with Eighth Wonder, the US design firm behind the New York, New York
casino in Las Vegas, on its long-shot $3.5 billion bid may or may not indicate
that Melco-PBL has changed its mind about Singapore's returns. But it certainly
reflects changes in the partnership. Merrill Lynch Singapore gaming analyst
Sean Monaghan foresees probity problems hindering Melco-PBL's Singapore bid,
but that view could miss the bigger point.
But just by submitting an application and subjecting itself to Singapore's more
intense scrutiny, Melco has made an important point. No matter how ugly you may
be, enter a beauty contest and you bask in its reflected glamour. Like Michael
Corleone, Lawrence Ho and his family have, fairly or unfairly, often suffered
from guilt by association. Joining the Sentosa bidding for once gives the Ho
family a chance to bask in integrity by association, an offer the new
generation of Hos couldn't refuse.
Gary LaMoshi has worked as a broadcast producer and print writer and
editor in the US and Asia. Longtime editor of investor rights advocate
eRaider.com, he's also a contributor to Slate and Salon.com, and a counselor
for Writing Camp (www.writingcamp.net).
