Legend of Macao Gambling King – Stanley Ho (Part 1)

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Mar 25 2007
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In the shape of a soaring lotus flower, the new Grand Lisboa opened recently is the crown jewel of a casino empire controlled by Stanley Ho, the 85-year old billionaire who had held the “Asia’s Las Vegas”, Macau’s (Macao) only gambling license for 40 years. The opening of Grand Lisboa attracted 500,000 visitors in 10 days. Despite longstanding allegations by government authorities worldwide that his casinos had ties to organized crime and were engaged in money laundering, loan sharking and prostitution, the old but strong-willed Stanley still holds on.

Today, five years after Stanley Ho’s gambling monopoly expired, the Americans plan to bury Ho’s old collection of smoky ballrooms empire. The Wynn Macao hotel and casino, from the Vegas heavyweight Steve Wynn’s Wynn Resorts (Nasdaq: WYNN, stock), opened last September. The MGM Mirage (NYSE: MGM, stock) has a huge project going up next door. And Las Vegas Sands (NYSE: LVS, stock) is building the world’s biggest casino and convention center worth $12 billion.

Stanley’s company, Sociedade de Jogos de Macao, or SJM’s spokesman, said Mr. Ho is confident he can meet the competitive threats posed by outsiders staking claims to the gambling boom. Ho has announced a clutch of his own mega projects, which include the Grand Lisboa, a pair of huge real estate and casino developments named Oceanus and Ponte 16, and a giant theme park called Fisherman’s Wharf.
The main attraction of this tiny Macao is the huge Chinese gamblers who traditionary love to gamble. Macao is such a magnet to the Americans businessman due to the fact that the average table in Macao earns three times more than a comparable table in Las Vegas, according to C.L.S.A. Asia-Pacific Markets, the investment bank. Macao posted $ 6.9 billion in gambling revenue in 2006 easily outpacing Las Vegas. Stanley Ho’s gambling company recorded $4.3 billion revenue in 2005. So it was not surprise to see 21 casino operators from around the world bid for gambling license a few years ago. Genting Group (KLSE: GENTING, stock-code 3182) was one of the bidder who lost.
Stanley Ho was born in 1921, into one of Hong Kong’s wealthiest and most prominent families. His grandfather, who was of Chinese and European descent, was a comprador, or go-between, for Jardine Matheson, the legendary British trading house and power broker that once dominated the colony’s maritime trade as well as its opium trade. Mr. Ho’s uncle helped finance Sun Yat-sen, who led the overthrow of the Qing Dynasty in 1911 and founded the Chinese Republic. And his father was a comprador for the powerful Sassoon trading house.

In the 1930s, amid a global depression, Stanley Ho’s father went broke and fled to Vietnam, leaving the family penniless. In 1941, after the Japanese occupied Hong Kong, Stanley dropped out of college and fled with other refugees to Macao. There, he made his first fortune by helping to run a trading company that swapped goods with the Japanese in exchange for food to feed Macao’s starving population.

After the war, Stanley returned to Hong Kong a wealthy man. He built upon that success in 1962, when he helped form an investor group that won the exclusive right to run all of Macao’s gambling operations. Mr. Ho had promised to bolster tourism by modernizing Macao and upgrading its infrastructure. But the main business of the original company – Sociedade de Turismo e Diversões de Macao, or STDM – was gambling, which was legalized in Macao in 1847 after Hong Kong unseated the Portuguese colony as the region’s major trading port.

Stanley’s casinos only see the real money flowing in at the late 1980s, after China’s economic reforms which created a class of wealthy entrepreneurs and gamblers. According to some historians, the bulk of Stanley Ho’s gambling revenue came from V.I.P. rooms he subcontracted out to groups that lured Asia’s high rollers to Macao. The subcontractors shared the gambling profits with Stanley Ho’s casinos.

Though the Law enforcement officials and gambling analysts say that many of the V.I.P. room operators had links to Chinese organized crime groups known as triads, they admitted the business model was a smart and brilliant way to maximize profit because it required very little investment on Stanley’s part. Stanley Ho’s casinos only had to provide the rooms, chips and dealers – the casino did not have to search for big customers, do background checks or ensure that the high rollers paid their debts. Stanley never denied that organized-crime figures operated in his casinos either.

Continue to Part 2 of “Legend of Macao Gambling King – Stanley Ho”

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