2005
January – Las Vegas Sands Corp (LVS) starts a new drive to recruit high roller players in Macau. The marketing campaign is a success, taking LVS’s share of the VIP table market from 2% of rolling chip turnover at the start of 2005 to 9.8% by year-end, even though the company has only one Macau property.
December – The average length of stay for Macau visitors remains stubbornly at 1.2 nights, despite an upgrade in facilities and room supply during the year. Tourism officials admit Macau remains overwhelmingly a day trip market for low-income visitors from the Mainland and high-income high rollers from Hong Kong and the Mainland—with not much in between.
Macau’s Statistics and Census Service estimates 18.7 million people visited the territory during the year—more than double the number recorded for 2000.
2006
January – The SJM-licensed Grand Emperor Hotel & Casino opens for business. The property on Macau peninsula is the first of the ‘new build’ SJM licensed properties in the market and features real gold ingots set into the floor (safely behind armoured Perspex). It’s in part a tribute to the background of Albert Yeung, the founder and chairman of the property’s developer, Emperor Group. He started in business in Hong Kong with a single jewellery shop. The company also names Hong Kong to Hollywood crossover actor Jackie Chan as a minority shareholder in the venture.
March – Galaxy’s Rio Casino opens in downtown Macau. The high roller-focused property offers four private VIP rooms as well as a mass gaming floor with 51 gaming tables and 150 slot machines. Table games options cover the Macau perennial favourite baccarat, plus blackjack, Caribbean Stud poker, roulette and the dice game sic bo.
Melco-PBL announces it has struck a deal to purchase a Macau gaming sub licence from Wynn Resorts for US$900 million. Melco-PBL, the joint venture between Hong Kong listed Melco run by Dr Stanley Ho’s son Lawrence Ho and Australia’s Publishing and Broadcasting Ltd, run by the late Kerrie Packer’s son James, is later rebranded as Melco Crown Entertainment after Mr Packer sells off many of his media interests and spins off his casino holdings into a new company called Crown Ltd.
Q1 2006 – Slot machine quarterly earnings in Macau break the US$50 million barrier for the first time. Slots bring in US$53 million in Q1 2006—almost twice as much as the whole of 2003. Despite the hike in slot earnings, they still account at the time for only 3.4% of Macau’s gross gaming revenues. In Las Vegas, slots average 55% of revenue on the Las Vegas Strip and 70% of revenue in the Downtown area.
May – Several thousand unemployed Macau residents take to the streets protesting about the use of foreign labour and migrants from Mainland China in the city’s booming casino construction sector. Four demonstrators are arrested in scuffles with police. The police report 25 officers are injured. The timing is a source of some embarrassment for the government, given that May Day is traditionally a time celebrating workers’ rights movements around the world.
June – Dr Stanley Ho’s investment holding company, STDM, announces it is postponing the planned public flotation on the Hong Kong stock exchange of its casino operating arm, SJM, until the following month. The delay comes after Dr Ho’s sister Winnie Ho, a shareholder in SJM, makes a legal challenge to plans to spin off the assets of SJM into a new holding company in order to complete the listing.
Canadian entertainment company Cirque du Soleil announces it has agreed a deal with Las Vegas Sands Corp to create an original stage show for The Venetian Macao, then under construction on Cotai.
Hong Kong-listed eSun Holdings, a company specialising in Chineselanguage film and music entertainment, announces financial partners for Macao Studio City on Cotai. Silver Point Capital, a US-based investment fund, along with former LVS executive David Friedman, are named as 40% partners in the HK$15 billion (US$1.94 billion at today’s prices) gaming and entertainment project. To date, only preparatory groundwork has been completed and analysts think the project may not now go ahead.
LVS obtains a US$2.5 billion syndicated loan for its Cotai projects. At the time, it is described as the largest ever single credit package extended to a non-government organisation operating within China. Goldman Sachs Credit Partners act as lead provider, with five other banks, including the now-defunct Lehman Brothers, sharing the debt risk between them.
July – Analysts speculate Harrah’s Entertainment Inc may be poised to take a stake in Hong Kong-listed operator Galaxy. Shares in Galaxy rise.
August – Dr Stanley Ho warns the Macau media of the potential for “vicious competition” in the high roller market, claiming LVS had significantly raised rolling commissions that month.
September – Wynn Macau has its first phase opening, with an initial price tag of US$1.2 billion. The 600-room property quickly grabs a mid-to-high teens percentage of Macau gaming revenue, thanks to its pre-arranged deals with Macau’s VIP gambling agents.
Galaxy’s Grand Waldo Casino and its accompanying Grand Waldo Hotel open a short distance from the Cotai Strip. The casino features 16 VIP gaming rooms, 166 tables and 350 slot machines. The Grand Waldo Hotel is equipped with 340 rooms, including two presidential suites and 24 VIP suites.
Melco PBL takes over Mocha slot lounges, a product aimed at local players, from SJM.
October – Galaxy’s StarWorld Hotel & Casino opens on the Macau peninsula. By January 2007 the HK$2.5 billion (US$320 million) property grabs a 22% share of gross gaming revenue, with net earnings per mass floor table of US$70,000 per month, compared to the Macau average of HK$40,000.
Macau Chief Executive Edmund Ho rules out issuing any more casino concessions “for the time being”. Existing concessionaires’ share prices rise on the news.
December – Melco PBL Entertainment (now Melco Crown Entertainment) raises US$1.14 billion on the Nasdaq market in New York to fund its Crown Macau and City of Dreams project on Cotai.
RelatedPosts
2007
January – Richard Branson’s Virgin Group is reported to be in discussions with Tabcorp, Australia’s largest gaming organisation, about the feasibility of building a US$3 billion casino project in Macau. Nothing comes of the plan.
February – SJM’s US$640 million flagship property Grand Lisboa, with its distinctive lotus design, opens to the public. The celebrations include the giving away of HK$10,000 (US$1,290) in cash to casino visitors randomly every 15 minutes. More than a million people visit the property by 28th February.
March – Wynn Resorts hires Bank of America, Deutsche Bank and SocieteGenerale to arrange US$1.25 billion of new loans. Some of the money is for extra capacity in Macau. The new project, focused on serving VIP players, is initially announced as Wynn Diamond Suites, but is later rebranded as Encore Macau, to match a similar expansion scheme by the company in Las Vegas.
April – Bally Technologies announces the gaming industry’s largest combined slot, casino management (CMS) and bonusing systems supply deal to date. The deal with LVS, valued at up to US$56 million, includes equipment for the Venetian Macao, six other hotel properties being built by LVS along the Cotai Strip, and the under construction Marina Bay Sands in Singapore. Prior to the liberalisation of Macau’s gaming industry in 2002, none of the then monopoly operator Dr Stanley Ho’s casinos featured CMS.
IAG’s columnist Octo Chang reveals the existence of illegal side betting in the Macau VIP market. It’s done either via a multiplier applied to the HK dollar chips presented on the table, or by agreement to accept the denomination of the bet in a higher value currency than the HK dollar chips on the table. In both cases, the effects are the same—greater rolling chip volume than officially advertised, giving more player entertainment and better junket margins, but ultimately a loss of revenue for the Macau taxman.
May – The May Day street protests seen in 2006 are repeated by the long term unemployed—this time with more violence. A policeman draws his service side arm and fires shots in the air. A ricochet hits a passing motorcyclist. The officer is cleared of wrongdoing following an inquiry. Ten people are arrested and 21 police officers reported injured during the demonstration.
Crown Macau (now Altira), a US$580 million self-styled, six-star, VIP-focused property, opens on Taipa.
Data collated by investment bank Goldman Sachs and CEIC, an economic research company, suggest between 2005 and 2007 GDP in six out of eight major Chinese cities neighbouring Macau has grown annually by at least 10%, and in two cases, more than 19%.
Chinese language newspapers report Guangdong province, next door to Macau, is starting to ration travel visas to Macau issued under the Individual Visit Scheme. They cite concerns about an overheating market.
June – Macau has the potential to become the Las Vegas of Asia, thanks to its large feeder market supported by rising incomes, Deutsche Bank’s Karen Tang tells IAG in an industry forecast.
July – “They want to be in a building that makes them feel good about themselves, that makes them feel powerful, that makes them feel their age – i.e., young, but not too trendy.” Paul Steelman, the world’s leading casino designer, tells IAG what it takes to create a successful gaming and entertainment property.
Desmond Lam, an assistant professor of marketing at the University of Macau, tells IAG about his studies into the psychology of Chinese gamblers playing table games. “Many Chinese players sincerely believe they can beat the house with their skill and wits, even though they usually also understand the odds of casino games are weighted in favour of the house,” he suggests.
Manchester United make their first visit to Macau (and their only visit to China that year) to play in the inaugural Venetian Macao Cup. United beat Shenzhen of the Chinese Super League 6-0.
August – Shortages of suitable local labour and rising prices for raw materials lead to cost blow outs on Macau casino projects. Las Vegas Sands Corp (LVS) says the cost of constructing all its properties on Cotai will increase by 40% to US$12 billion.
The US$2.4 billion Venetian Macao- Resort-Hotel opens on Cotai. It has a 546,000 sq. ft gaming floor with 870 tables and 3,400 slots as well as 3,000-room hotel, a major Venice-themed shopping complex and singing gondoliers. The opening ceremony includes an appearance by Taiwan vocal superstar Zhang Hui Mei and Motown singing legend Diana Ross. The 15,000-capacity Venetian Arena (later rebranded as the Cotai™ Arena) instantly becomes one of Asia’s largest indoor concert and sporting venues. In the opening months, headline events include NBA basketball exhibition games and a match-up of tennis greats Roger Federer and Pete Sampras.
Local media report that travel restrictions from China into Macau appear to be easing.
September – Harrah’s acquires Macau Orient Golf, a Cotai golf course on 175 acres next to the Lotus Bridge, one of the two border crossings from Mainland China. Harrah’s tells the media it has no plans to try and parlay the site into a casino project. Analysts wonder why, in that case, Harrah’s paid US$577.7 million for the site—a sum significantly above the then going rate for semi-developed land on Cotai. The fee is confirmed in a company filing to the US Securities and Exchange Commission.
November – Macau holds its first ever professional poker tournament, organised by the Asia Pacific Poker Tour (APPT) at the Grand Waldo Hotel in Taipa. The main event is so successful (attracting 352 players) that the organisers have to borrow extra tables from the training rooms of neighbouring casinos.
CotaiJet, a subsidiary of LVS, launches a ferry service between Hong Kong Macau Ferry Terminal on Hong Kong Island and the newly opened Taipa Temporary Ferry Terminal.
December – MGM Grand Macau, the US$1.25 billion, 50:50 joint venture between MGM MIRAGE and Pansy Ho, opens on the Macau peninsula, using a sub-licence purchased from SJM. Market rivals Steve Wynn and Dr Stanley Ho are among the guests for the lavish opening ceremony. It is the fourth and final major casino launch in an action-packed year.
CotaiJet is forced to suspend ferry services to Taipa pending a legal challenge by a rival ferry concession bidder made to a Macau court.
Crown Macau (now Altira) announces a record 1.35% VIP rolling chip commission deal with Hong Kong-listed junket consolidator Amax.
2008
January – Aristocrat, the Australian slot machine maker, tells IAG it is setting up an assembly line in Macau to build gaming slot machines for the Asian market.
Ao Man-long, Macau’s former Secretary for Transport and Public Works, is jailed for 27 years for corruption. In a lengthy trial in 2007, he was accused of graft, including massive bribe taking amounting to at least HK$637 million (US$82 million) in exchange for awarding public works contracts. Investigators found HK$80 million in a safety deposit box in Hong Kong, and said other assets included a ￡6.1 million (US$10 million) home in London.
The Macau Intermediate Court removes an interim injunction against LVS that prevented the company from operating a ferry service between Hong Kong and Cotai.
February – Ponte 16, a HK$2.4 billion (US$310 million) casino and hotel joint venture between SJM and Macau Success (now Success Universe Group Ltd), opens at Macau’s Inner Harbour. It features 270,000 square feet of gaming floor with 150 gaming tables, five VIP halls and 320 slot machines.
April – Edmund Ho, Macau’s chief executive, announces a moratorium on new gaming projects and licences. The shares of Macau’s existing concessionaires rise in value at the news.
In the same speech, Mr Ho proposes a commission cap on VIP rolling chip commission at 1.25%. He suggests the government will seek industry support for the measure, but indicates it will be willing to impose it if necessary.
In his policy address only nine days before May Day, Mr Ho announces every permanent resident and non-permanent resident of Macau will receive a one-time government subsidy of MOP5,000 and MOP3,000, respectively, in July. That year’s May Day workers’ rally goes ahead, but only a few hundred turn out. The event passes peacefully and without arrests.
A Clark County jury in Las Vegas awards Hong Kong businessman Richard Suen US$43.8 million after he claims he helped Las Vegas Sands Corp (LVS) win its Macau gaming licence. LVS appeals against the decision.
May – The December 2007 decision of Crown Macau to offer a record 1.35% rolling chip commission to VIP betting agents takes the property from also-ran to market leader in less than six months. Toward the end of Stanley Ho’s 40-year casino operating monopoly in Macau, the average commission rate on VIP rolling chip sales in Macau was only 0.7%.
Galaxy announces it plans to open a ‘jumbo’ VIP facility with 100-plus tables at its StarWorld Hotel & Casino on the Macau peninsula. Analysts say the company is expected to populate the tables by following the MPEL/Crown Macau model and doing a deal with a junket aggregator. The aggregator is later named as Neptune Group.
July – Dr Stanley Ho is named as ‘most influential person’ on Inside Asian Gaming’s inaugural ‘Asian Gaming 50’ list of top personalities in the regional industry. Sheldon Adelson, Chairman and CEO, Las Vegas Sands Corp, is in second spot. Steve Wynn, Chairman and CEO, Wynn Resorts, is named in third place, indicating the powerful new role that Las Vegas-based companies now have in a formerly localised industry.
SJM, Dr Stanley Ho’s casino operating company, finally raises US$500 million from its long-delayed Hong Kong IPO. The offering had been proposed as far back as June 2006, but delayed repeatedly because of litigation.
SJM announces in its IPO prospectus it plans to use the money from the listing for a series of new and revamped properties located in clusters around the Macau peninsula. They include Oceanus, a casino designed by Paul Steelman on the site of a former shopping centre only a few minutes’ walk from Macau Maritime Terminal. Oceanus is due to open at Christmas 2009.
August – Portuguese news service Lusa reports that Beijing is again rationing permits to visit Macau, in a bid to cool a rapidly expanding market that recorded 50% revenue growth year on year in the first half of 2008.
The average hotel stay in Macau reaches 1.5 nights for the first time, according to the city’s Statistics and Census Service. Supporters of the integrated resort concept imported from Las Vegas take it as a vindication of their policies. By the end of the month, the total number of guest rooms available in the hotel sector grew by 799 (+5.1%) from a year earlier, to a total capacity of 16,577 rooms.
The Asian Poker Tour offers a then Macau record US$1.5 million guaranteed prize pool for its inaugural Texas Hold’em tournament at Galaxy’s StarWorld Hotel & Casino.
Central and local government agree to fund 42% of the US$5.47 billion cost of a Hong Kong-Zhuhai-Macau superbridge across the Pearl River Delta, Work on the 18-mile long structure is expected to start in 2011.
October – Macau feels the first aftershocks from the financial earthquake caused by the credit crisis in the Western financial system. VIP players with factories in Mainland China experience a slowdown in orders from abroad and a more conservative approach to the issuing of gambling credit by VIP agents and casinos.
SJM Holdings announces its first trading results since going public in July. It reports an 8.1% increase in net profit year- on-year for the first half of 2008. Analysts point out the pitfalls of comparing private company results with public company ones.
November – Auditors for Las Vegas Sands Corp issue a warning to the US Securities & Exchange Commission over LVS as “a going concern” because of debt repayment pressure on the heavily borrowed company. LVS Chairman Sheldon Adelson remains calm, saying his business will have no problems meeting its obligations.
Xinhua, China’s official news agency, publishes a story suggesting Macau’s infrastructure can only cope with 79,000 visitors per day. The report is seen as support for the official policy of visa rationing.
LVS suspends work on plots five and six of The Venetian Macao site because of debt repayment pressures. Around 9,000 construction workers from Hong Kong and Mainland China are forced to leave Macau as their contracts are cancelled.
December – Macau’s Statistics and Census Service estimates a record 30.1 million people visited the territory during the year – more than three times the number recorded for 2000.
Macau’s gross gaming revenues are likely to fall by 17% in 2009, estimates a report from Goldman Sachs. But the finance house says the suspension or delay of Macau gaming projects because of the global credit squeeze could actually benefit some operators.
Revenue from slots in Macau reach the equivalent of US$710 million in 2008— up 57.2% on 2007. Some of the boost in productivity on a per slot machine basis is due to a reduction in the total number of machines on casino floors—from 13,267 at the end of Q4 2007, to 11,856 at the end of Q4 ’08. Those that remained, though, brought in more cash than ever. The gross revenue from slots in Q1 ’09 was MOP1.53 billion, up 3.72% quarter on quarter and up 13.2% year on year.
2009
January – Deutsche Bank says Galaxy Entertainment Group may need to suspend construction of its flagship integrated resort at Cotai in 2009 because of a likely funding gap.
February – Macau’s Legislative Assembly passes a National Security Bill. Articles 3, 4 and 5 make illegal “sedition, secession, subversion and treason against the Central People’s Government of China”. Supporters of the bill say it is a necessary measure to protect law and order and peaceful economic development. Opponents say the law is far too broad in scope and contravenes Article 19 of the International Covenant on Civil and Political Rights, to which Macau is a signatory. Hong Kong’s Legislative Council steps back from passing similar legislation after public protests.
March – Francis Lui, deputy chairman of Galaxy, tells IAG the company will finish its Cotai integrated resort “when market conditions are right”. “We have a very strong balance sheet with over HK$5 billion in cash, which we strengthened recently with our bond buyback programme. So we’re in a safe, comfortable position right now,” adds Mr Lui.
April – The government announces another cash handout, with MOP6,000 to every permanent resident and MOP3,600 to non-permanent residents. Only around 200 people take to the streets on Labour Day.
May – Media reports suggest Dr Stanley Ho offered to buy out LVS’s interest in Cotai plots five and six in the wake of LVS’s well-documented funding challenges. Given the animosity of gaming regulators and law enforcement in the United States toward Dr Ho, the offer is subsequently considered to be a bit of grandstanding by SJM at LVS’s expense.
A cap on VIP chip commission proposed by the Macau government could be a boon to local gaming operators, suggests a report from Morgan Stanley Research Asia/Pacific. A cut in the upper level of Macau VIP chip commission rates of just 10 basis points (i.e., 0.10%) could lead to a dramatic improvement in pre-tax margins and pre-tax earnings say the authors.
MGM MIRAGE says in a filing to the US Securities and Exchange Commission that New Jersey’s Division of Gaming Enforcement (NJDGE) had described Pansy Ho, its joint venture partner in the US$1.25 billion MGM Grand Macau, as “unsuitable”.
June – City of Dreams, MPEL’s US$2.1 billion flagship integrated resort on Cotai, has its first phase opening. Crown Towers, with its high roller suites and the Hard Rock Hotel, with its branded Hard Rock Casino, open first, followed by the 800-room Grand Hyatt Macau in the autumn.
Dr Stanley Ho, Chairman of SJM Holdings Ltd, and considered the father of Macau casino gaming in the modern era, is presented with a G2E Asia Visionary Award at the annual exhibition for the industry.
July – Chui Sai On is formally selected as Macau’s Chief Executive-elect. His inauguration takes place on the 10th anniversary of the establishment of the Macau Special Administrative Region in December. Mr Chui will be the second person to hold the job since the territory was passed from Portuguese administration back to China in 1999.
The Chamber of Macau Casino Gaming Concessionaires and Sub-concessionaires is officially launched in a ceremony at SJM’s Grand Lisboa. The operators had been meeting regularly since earlier in the year to discuss issues of mutual interest, including pricing and intensity of competition during an economic downturn.
August – Dr Stanley Ho is admitted to hospital in Hong Kong, reportedly after a fall at home. Only days earlier, Dr Ho had been named as first chairman of a new trade association for Macau casino concessionaires. His extended absence from the Macau gaming scene after nearly 50 years sparks speculation about a possible succession process for his casino operating company, SJM Holdings.
The government drafts a regulation to allow for the imposition of a cap on VIP rolling chip commissions of 1.25%. By then, the operators have effectively preempted the rule by agreeing voluntary controls among themselves.
September – L’Arc, a new casino hotel licensed by SJM, and with slots managed by Malaysia’s RGB, opens in the ‘Royal District’ on the Macau peninsula.
‘The Asian Gaming 50 – 2009’, the second annual ranking of the industry’s most influential people, is published by Inside Asian Gaming. Lim Kok Thay, Chairman and CEO of Malaysia’s Genting Berhad, displaces Dr Stanley Ho in the number one spot. Mr Lim’s rise in the rankings marks his company’s sound financial gearing and major expansion in Asia. Genting runs Genting Highlands Resort in Malaysia, is a developer of new gaming resorts in Singapore and the Philippines, and is also the parent company of casino ship operator Star Cruises (now Genting Hong Kong).
Sources in the travel industry in China say that Beijing may once again be applying the brakes to the number and frequency of visits to Macau.
October – Beijing may prefer to keep revenue growth in the Macau gaming market in line with GDP growth in China, Bill Lerner of Las Vegas-based Union Gaming Research tells IAG.
Wynn Resorts raises more than US$1.8 billion with aggressive pricing of its local unit floated on the Hong Kong stock exchange.
Final plans for phase one of Macau’s long-awaited light rail system are published. The MOP7.5 billion (US$940 million) estimated cost is 80% up on the figures quoted for an earlier version of the scheme published in 2007. The mass transport system is due to be operational by 2014.
Macau’s Statistics and Census Service says 17.8 million people visited the territory between January and October. It puts Macau on course for an annual visitor total a third down on 2008. Recession is not the only factor. During the year the Macau government changes the way it measures visitor arrivals, distinguishing between de facto tourists and daily migrant worker arrivals.
November – Galaxy announces it will open Galaxy Macau, its suspended flagship resort project on Cotai, in the first quarter of 2011.
The Macau government’s accumulated budget surpluses and reserves are expected to amount to MOP100 billion (US$12.5 billion) by the end of the year, the Chief Executive Edmund Ho tells the Legislative Assembly.
Las Vegas Sands Corp raises US$2.5 billion by floating a local unit on the Hong Kong stock exchange. Sands China prices its initial public offering conservatively in an effort to guarantee its success.
December – One Central, a new luxury apartment and shopping complex developed by the property and shipping conglomerate Shun Tak and Hongkong Land, opens on the Macau peninsula. It was conceived with the idea of driving VIP business to the MGM Grand Macau casino next door, and high-rollers from the casino to the One Central mall. Pansy Ho, managing director of Shun Tak, is also a joint venture partner in MGM Grand Macau.
SJM is scheduled to launch its latest casino project, the Paul Steelman-designed Oceanus; on the site of a former shopping centre just a few minutes walk from the Macau Maritime Ferry Terminal at the Outer Harbour.
20th December – Macau marks the 10th anniversary of the establishment of the Macau Special Administrative Region, and the inauguration of Chui Sai On as the second Chief Executive of Macau SAR.
