Why is Pansy Ho selling down from joint control of the MGM Macau casino project done with MGM Resorts?
The prime reason is probably not the old chestnut about the US authorities not liking her father Dr Stanley Ho (though that’s true). The most obvious answer is because she might have her eyes on another prize—control of her father’s Macau investment holding company STDM.
And for once it’s the toughness of Macau’s own regulations, rather than the sniffiness of the Americans, that would initially bar the way for Ms Ho were she to remain as 50% partner in MGM Macau. Macau law stipulates that one person cannot have a controlling interest or joint controlling interest simultaneously in two different gaming concessionaires or sub-concessionaires.
Even if the Macau rules didn’t say that, or anyone in high places was minded to overlook them (we’re talking about the Ho family and Macau after all), it’s true that she would have been hearing from US gaming regulators pretty quickly if and when she did make a move to run STDM without selling down in MGM Macau.
The US authorities have always kept her father at arm’s length because of his alleged links with triads. But they weren’t so fastidious back in 2002—when the new gaming licences were being divvied up—as to tell US gaming companies they couldn’t sign up for concessions in a Macau market where Dr H was going to continue being a major player.
And is Ms Ho’s decision to step back from joint control of MGM Macau quite as comprehensive as it appears to be? According to a filing with the US Securities and Exchange Commission, after the flotation of MGM Macau in Hong Kong (via a company called MGM China Holdings), Ms Ho will be reducing her holding in the joint venture to 29%. This would leave MGM Resorts International with a controlling 51%, Pansy Ho with 29% and public investors with 20%. But it’s also been reported in the Wall Street Journal that, according to a “person familiar with situation,” she is likely to keep her role as Chairman and Managing Director of MGM Macau, though her role will be diminished. That might be enough to satisfy the Macau authorities in the event she also ends up running STDM. But would it satisfy the US regulators that MGM Resorts must answer to in its core markets in Nevada and beyond? US regulators might argue that for Pansy Ho to have an executive leadership role in MGM Macau at the same time as heading up an allegedly ‘triad tainted’ STDM is simply to revisit the same old issues that have caused problems for the Ho family when they have sought to tie up with overseas operators.
When Hong Kong-listed Melco, run by Pansy’s brother Lawrence Ho, started exploring a casino development tie up in Macau with James Packer’s Publishing and Broadcasting Ltd (PBL) back in 2003, it quickly became apparent that using an SJM licence for such a venture wouldn’t wash with the Australian authorities
Dr Ho and the Australians had ‘history’ as they say—dating back to the 1980s and 1990s. No less than three Australian states and one Australian territory knocked him back when he applied to take controlling stakes in casino ventures there. In the end, Mr Ho junior and Mr Packer opted to stump up US$900 million for a sub concession from Steve Wynn’s Macau gaming licence rather than persisting with the plan of using an SJM licence. Even then it took the Australian authorities two years to sign off on the Melco-PBL tie up (which later morphed into a Melco-Crown Ltd joint venture after Mr Packer spun off his gaming interests in PBL into a new company called Crown Ltd).
Meanwhile, back in the fun house that is STDM/SJM, what if anything will this MGM Macau development do to the recent truce between Pansy Ho and her father’s fourth consort, Angela Leong? Under that truce, Ms Leong was reported to be guaranteed six years as boss of SJM Holdings. But if Ms Ho plans a hands-on rather than ceremonial role at SJM’s parent STDM (via the Lanceford shares formerly held by her father), that could put a different complexion on the situation—especially once Dr Ho is no longer around to act as umpire.
