G3 MARKET INSIGHT MACAU
To understand the governance of Macau’s gaming industry, could you give your view of its history to present day?
Lawrence Ho: Macau, before its handover back to China in 1999, was a Portuguese colony for over 100 years. During this time, Portugal allowed Macau to operate a gaming monopoly. Macau, as a city and as an economy, is tiny. Even now with the expansion of land supply through reclamation, it is only 30km.sq in radius. To put that into perspective, Disney World in Orlando is actually three times bigger.
Before the introduction of its gaming concession, Macau was a quiet sleepy fisherman village, but having the ability to offer casino gambling started a brand-new industry for Macau - tourism and entertainment. And as technology improved in terms of transportation, Hong Kong became the dominant market for Macau back in the 70s, 80s and 90s. Of course, when China started reforming its economy, the subsequent handover meant that China is by far Macau's biggest market to the present day.
In regards the liberalisation of the Macau market, was this a deliberate push to accelerate the growth of the industry?
Macau 2.0 Te operator perspective -
Melco Resorts & Entertainment
G3 discusses the past, present and future of Macau with Lawrence Ho, the Chairman and Chief Executive Officer of Melco
Resorts & Entertainment, a developer, owner, and operator of integrated resort facilities in Asia and Europe.
The company currently operates Altira Macau, Taipa, Macau and City of Dreams, in Cotai, Macau. Its business also includes the Mocha Clubs in Macau and majority ownership and operation of Studio City in Cotai, Macau. In the Philippines, a Philippine subsidiary operates and manages City of Dreams Manila, while in Europe, the company is currently developing City of Dreams Mediterranean in the Republic of Cyprus.
Lawrence Ho: Absolutely. My father won the right to operate Macau’s gaming monopoly in 1961, beating the incumbent to uphold the monopoly until 2002. Following the handover back to China in 1999, the new Chief Executive of Macau, effectively the new governor, Edmund Ho, rightly decided that in order to take Macau to the next stage, gaming needed to be the driver. He considered that my father and his company, Sociedade de Jogos de Macau (SJM), had successfully operated the monopoly for 40 years, but that there needed to be competition. I believe the reference point was the Las Vegas market in terms of free market competition and the decision was taken to open a tender for three concessionaires, which eventually became six.
Close to 20 companies from around the world tendered their bids, with the competition ultimately selecting three companies, one was my father's company SJM, Wynn Resorts from Las Vegas was the second, and the third was a joint venture between a local company that didn't have any casino gaming experience, called Galaxy, which partnered with Las Vegas Sands (LVS).
Subsequent to attaining the licences at the end of 2002, Galaxy and LVS concluded that they couldn't work together.
“Edmund Ho, rightly decided that in order to take Macau to the next stage, gaming needed to be the
driver. He considered that my father and his company, Sociedade de Jogos de Macau (SJM), had successfully operated the monopoly for 40 years, but that there needed to be competition.”
The cultures of both companies clashed; the values both held were too different and so the Macau government used a legal loophole to split their licence in half. Following the split, SJM and Wynn, the remaining concessionaires, went to the government arguing that they should also be allowed to split their licences.
The outcome was that both SJM and Wynn were allowed to
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