Ho Loses Macau Stranglehold

Casino mogul Stanley Ho, who once had a 40-year stranglehold on the market as Macau’s sole casino owner, now sees his grip on the market is gone. In 2002, the region’s government sold additional gaming rights to companies such as Las Vegas Sands and Wynn Corporation. While the market is exploding as bigger and better casino resorts open, less people are visiting his venerable gaming establishments.

According to the South China Morning Post, one third of his gaming halls are on the brink of bankruptcy. Ho currently owns 16 of the 22 casinos. Ho operates the casinos through Socieda de Jogos de Macau SA.

Already his competitors are scooping up market share. Las Vegas Sands Corp., which owns the mega sized Venetian Resort as well as the new, yet to open 3,000 room behemoth Palazzo (both on Vegas), has already seized about 20 percent of the market from Ho, according to JP Morgan analysts Billy Ng and Steven Li wrote in a report published August 3.

Additionally, Galaxy Casino, S.A., has opened three new casinos this year alone. According to the company, they have jumped to a 20 percent share of the market from seven percent in January. The company thinks is can grab another five percent share as well.

Though its only been open a month, the new Wynn Macau resort pulled in an astounding $900 million during its first 13 days of operation in September.

Now, Galaxy's StarWorld Casino is threatening to tighten the noose. The hotel, which is the region’s tallest, features about 290 tables and 300 slot machines, with specially-designed VIP floors. There are more than 500 hotel rooms and suites, including two luxury "Sky Suites."

``If you look at SJM's existing casinos, none of them comes close to StarWorld in terms of facilities and the physical setting,'' said Galaxy's vice chairman, Francis Lui. ``Those casinos were either built before the 1980s or converted from office buildings, usually with poor ventilation and lighting.''

StarWorld, Galaxy's fifth casino in the former Portuguese colony, targets Macau's mid-range gaming market, which has surged since the opening of Sands Macao, the city's first Las Vegas- style casino, in 2004, Lui said. StarWorld's opening ``will be a defining moment for our group,'' he told Bloomberg.

And it looks like it is just going to get worse. 

Las Vegas Chairman Sheldon Adelson is readying another property to debut in the back half of 2007. The 3,000 room Venetian Macau will replicate its Las Vegas version. He has also hinted at building as many as 60,000 hotel rooms during the next decade.

Macau, a former Portuguese colony, is expanding its gaming market exponentially. According to a forecast by Globalysis, the destination is predicted to top more than $8 billion on 2007, which is more than the Las Vegas is expected to rake in.

Macau had a total of 18.71 million visitors last year, compared to 16.67 million in 2004. Visitor arrivals rose 40% in 2004, thanks in part to a relaxation of China's travel rules that allowed mainland Chinese to travel more easily to Macau. In 2005, visitors from the mainland accounted for 56% of the total, or 10.46 million.

"Macau will continue its transformation into a holistic leisure tourism destination in 2007,” said Jonathan Galaviz, a Globalysis partner. “We believe that Macau's casino gaming revenue in 2007 will be driven by substantial growth in non-casino amenities such as new convention center venues and innovative entertainment options incorporated into Macau's fresh Las Vegas style integrated resorts."

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