A Gordian knot of interests tie together the gaming markets of Las Vegas, Macau and future sites for development. A couple of these strands threaten MGM Mirage (NYSE:MGM)'s expansion plans.
One end of the knot is in Macau. Billionaire Stanley Ho was in on the ground floor of development there, at one time owning more than three-fourths of all the casinos. His share has dropped substantially with the influx of new developers, including the Las Vegas Sands (NYSE:LVS) and Wynn Resorts, Ltd (NASDAQ:WYNN).
Now his son Lawrence Ho is partnering with Australian James Packer to build a new casino, the Crown Macau, scheduled to open this year, as well as another $2 billion complex, the City of Dreams, opening in 2008. Packer, a friend of Steve Wynn of Wynn Resorts, is rumored to be also interested in buying into the Las Vegas market.
At the same time, Lawrence's sister Pansy Ho has partnered with MGM Mirage of Las Vegas to build the new $1 billion MGM Mirage Macau, also opening this year.
How does this add up to trouble for American firms? Under Stanley Ho's leadership, the Ho family was long suspected of having ties to organized crime. This suspicion has caused the children and their partners a great deal of difficulty in gaining permission for developments in other parts of Southeast Asia.
How this impacts U.S. gaming:
- The Nevada Gaming Commission is so concerned about MGM Mirage's involvement with Pansy Ho they are considering a formal inquiry. New Jersey regulators have already been investigating her for some time.
- If James Packer tries to enter the Las Vegas market, his partnership with Lawrence Ho may inspire the same concern.
- Singapore, a juicy target for casino development, has already denied the Ho family a piece of a proposed $5 billion casino development on Sentosa Island. Partners of the Ho family such as Packer and MGM Mirage may find themselves tainted by these relationships if they want to enter this market.
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