August 29, 2006

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Monopoly money

It's not easy being a monopolist for 40 years, reaping massive profits, before the harsh winds of competition ruin your monopoly rents. Just ask casino mogul Stanley Ho, who's been mouthing off for weeks. From the unlinkable SCMP:

Gaming mogul Stanley Ho Hung-sun yesterday accused the Macau government of favouring his American competitors. The tycoon also suggested that "vicious competition" in Macau's casino industry may incur the ire of Beijing, while attending the launch of budget airline Viva Macau's first Boeing 767 jetliner at Macau International Airport.

But William Weider, chief operating officer of Las Vegas Sands, said on a different occasion that competition was inevitable and beneficial to Macau's economy.

A grim Mr Ho said: "I can't take it lying down. Why do you so favour the Americans? It's unfair." He said some US stakeholders in the gaming industry had broken their promise of "peaceful competition" while disregarding Macau's future. "At that time they said there would be peaceful competition. We invest in Macau all the money we earn, but you guys [Americans] just take it away."

The tycoon said some US stakeholders had tried to break his helicopter monopoly - important for bringing in high rollers - but he would not give it up.

He also complained about losing casino staff: "They never trained any staff but took away ours." He said the cutthroat competition would hurt the long-term interests of Macau, and even Beijing. "In the long run, they may take away my business and affect Macau. They may send people to the Legislative Assembly and take control of Macau. It may not be good for Beijing either."

Earlier this month, Mr Ho called for an industry chamber to regulate the stakeholders. The tycoon then said one third of his Sociedade de Jogos de Macau's VIP gaming halls faced bankruptcy, putting thousands of jobs at risk.

You hear that, you nasty Americans? Stanley's going to call on Beijing to take control if they don't stop being so, umm, capitalist. Or something. It's not fair. Except for Macau itself, which is experiencing booming economic growth and a massive influx of investment.

Perhaps Mr. Ho should take a look at Hong Kong's gambling "monopoly", the Hong Kong Jockey Club. In this case, the monopolist faces massive competition from illegal bookmakers. So naturally they respond as any player does in a competitive market: they look to match terms. Indeed the HKJC has been lobbying the government for years to change the legislation and tax regime to allow the HKJC to better compete with the illegal bookies.

As I said, it's not easy being a monpolist.

Update 12:51

Hemlock joins in kicking a monopolist while he's down:

The putrid stench of hypocrisy permeates the Big and Little Lychees this morning. In Hong Kong, Gillian Chung of the inane Twins duo sobs to the press in the company of fellow Canto-stars about the terrible ‘ordeal’ she has suffered after gossip rag Easy Finder ran blurred photos of her apparently adjusting her bra strap. All sorts of publicity-seeking invertebrates and moralizing bores, from politicians to feminists to the Society for Truth and Light, are jumping on the bandwagon. Were my hands not occupied gripping an extra-large air motion discomfort receptacle, I would be tempted to give Chung a slap on her tear-streaked face and a reminder to tone down the hysterics. Much more weeping, and she’ll start giving people the impression it’s just an act. They might even think that rather than being the distraught, innocent victim, she is no more than a talentless bimbo who signed up to become a manufactured product created by a company whose boss sleeps with every starlet and her mother and gets his way by ordering kidnapping, rape and choppings. Which, being totally untrue of course, would be tragic. “What I am most worried about,” she tells us, “are my young fans who look up to me as a role model.” They scare me, too.

Meanwhile, in Macau, Stanley Ho is equally distressed about how much harder life is when you no longer have a casino monopoly. In recent remarks on the subject he has accused his new American rivals of poaching staff that he has trained (but also somehow threatening people’s jobs) and taking money out of the city. He has even dropped hints that Beijing will not be happy. Sheldon Adelson, owner of the space-age Sands casino and the vast, forthcoming Venetian, says that the real competition has barely started – wait until Steve Wynn sets up shop.

Ho’s plight is a vivid reminder of how our local tycoons are to real businessmen as Twins are to the Berlin Philharmonic. They don’t do creativity, acumen or skill. All they know how to do is corner a market with Government help and skim the wealth off. Hong Kong’s property development industry has made Li Ka-shing, Lee Shau-kee and the Kwok brothers multi-billionaires, and officials and the public fawn over them as if they were Cantopop’s finest. But the industry is little more than a state-organized pyramid scheme. A chimpanzee could make money out of it. And all the members of the cartel have ever done with their gains is buy up other rigged industries at home, like utilities, bus lines and supermarkets. Only Li has ventured much overseas, and then only to indulge in (sometimes clever) asset trading. Henderson or Sun Hung Kai wouldn’t last five minutes in an environment where you fight to add the most value. They survive only because consumers have no choice. The same, of course, applies to our political leadership. Some places get Bill Gates or Richard Branson, Ronald Reagan or Margaret Thatcher. Here, we’re impressed if you can adjust a bra strap.

posted by Simon on 08.29.06 at 09:27 AM in the Macau category.


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Yes perhaps an upgrade of the old casinos in Macau might actually make for a better product.

It's inevitable that there would be poaching of staff when there is still a requirement that I think about 50% of staff be hired locally, in a city that has a tiny population.

posted by: HK Dave on 08.29.06 at 12:56 PM [permalink]

HKJC is not much better than Ho's clan.

IMO HK should deregulate, or at least award the footbal gambling through open bidding.

posted by: sun bin on 08.29.06 at 11:20 PM [permalink]

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