Inside Asian Gaming

INSIDE ASIAN GAMING | June 2010 28 Stanley Ho–facing up to competition central government in Beijing as another way of clamping down on the outflow of money into foreign hands? 6. And at the end of the day, does the Macau government really feel that it owes an obligation to the international community to safeguard their investments, or are its priorities inclining more towards keeping the people immediately above and below them happy? So how do the operators work their way out of this murky bind? There is an ancient, wise Confucian saying that has been circulating for millennia—“When in Rome... ”. The commission ‘cap’ The second and almost played out issue of a junket commission cap should be viewed in its entirety from the beginning of the saga to the current status quo. The ‘Big Bang’ of liberalisation in the Macau gaming market began in 2004 with the opening of Sands Macao, the first foreign owned, mass-market property. After a two-year lull, as the other foreign operators beaveredawayontheirconstructionprojects, the foreign invasion really began, withWynn Macau opening in September 2006. The foreigners brought some Las Vegas glamour to Macau, with their glitzy properties, stylish entertainment offerings and fleets of sleek black limousines. Even more importantly, Wynn Macau started seriously competing with Stanley Ho’s SJM for junket business. It was probably no coincidence then that in September 2006, Dr Ho bemoaned the rise of junket commissions brought about by the new comers Galaxy and Sands (junket commissions went from 1% to 1.25% as both Galaxy and Sands battled each other to see who could poach the greater number of junkets away from SJM), claiming they were forcing some of his VIP rooms toward bankruptcy. To which, Mr Adelson growled that famous line echoing US President Harry S. Truman: “If he can’t stand the heat, get out of the kitchen.” The Amax effect Fast forward to late 2007, when after six months of poor business, the casino at the former Crown Macau, now Altira, launched its new“creative funding”1.35% commission agreement with AMA International, a junket consolidator majority owned by Hong Kong- listed Amax Entertainment Holdings Ltd. Altira Macau (formerly Crown)—the cause of commission war? Market View