Macau’s casinos had a rough second half of 2014, and there’s no immediate end in sight for their struggles. The major casino owners have now lost billions in the process.
With China’s corruption crackdown in full effect, the flow of VIP clients to the gambling enclave isn’t expected to improve any time soon, and the mass market isn’t growing fast enough to make up for the missing whales.
The result was double digit year-over-year revenue drops for Macau’s casinos over each of the past six months, a trend that is likely to continue into 2015.
That’s bad news for some of Hong Kong’s richest individuals.
While few of them will ever be crying poor just because Macau’s growth has grinded to a halt, the loss of value in casino properties has shaken up the leaderboard of the richest people in Hong Kong.
Casino Owners on Forbes List Drop in Rankings
According to Forbes’ list of the richest individuals in Hong Kong, all four casino owners who were capable of making the list saw their fortunes decline precipitously in 2014.
Near the top, Galaxy Entertainment Group chairman Lui Che Woo saw his estimated net worth decline by $7 billion. Now worth only a paltry $13.4 billion, Lui ranks just fifth in the rankings, down from second place in 2013.
Several associates of Macau casino magnate Stanley Ho saw their fortunes decline as well. Daughter Pansy Ho, who is the co-chair of MGM China, fell from ninth place to 12th on this year’s list, with her net worth now estimated at $5 billion.
Lawrence, a son of Stanley, is down to 31st place with a $2 billion net worth. Lawrence Ho controls two-thirds of casino operator Melco Crown Entertainment, which is also partially owned by Australian billionaire James Packer.
Two of Stanley’s wives were also hurt by the flagging fortunes of Macau’s casinos. Fourth wife Angela Leong, who is a major shareholder in SJM Holding, fell to 36th in the rankings from 19th last year.
Another wife, Ina Chan, fell off the list entirely, as the value of her stake in Macau Legend was approximately cut in half.
Alan Ho Busted in Prostitution Sting
The Ho family isn’t just hurting in the pocketbook, either. Alan Ho, Stanley’s nephew, was one of six people arrested on Saturday by Macau police at SJM’s Lisboa hotel.
Apparently, Alan (who serves as a senior executive for SJM and is said to be the de facto leader of the Lisboa) was accused of operating a major prostitution ring, as were the other individuals arrested.
In Macau, prostitution is legal, but inciting prostitution is against the law. According to local media reports, the bust was the largest crackdown on an illegal operation since 1999.
Police allege that the prostitution ring employed some 2,400 sex workers and made at least 400 million pataca ($50 million).
Lawrence Ho Still Bullish on Macau for 2015
Despite the waning fortunes and other troubles in his family, however, Lawrence Ho still says he expects casino revenue to improve for Macau in 2015.
Melco Crown itself is partnering with Time Warner to open a new family entertainment center in an effort to attract more tourists and mass market gamblers.
Ho says this is critical, because even without the impact of China’s anti-corruption drive, there are only so many ultra-rich players out there for casinos to attract.
“If you look at China, how many more billionaires are going to drop out of trees in the next 10 years?” Ho told Bloomburg in an interview. “It is going to be the rise of the middle income earnings demographics. These are the younger people who want to travel, experience the world.”