Economy

House rules

Macau’s new boss coy about casino licencing plan

Ho-Lat-seng-w

Holds all the chips: Ho Iat-seng

Gambling on election results has become big business in recent years. Colourful candidates help juice up the betting. For instance, when Donald Trump first announced his campaign for the presidency in August 2015 the odds on his victory were 25 to 1, reported Fortune magazine. They were still 5 to 1 on the day of the election, indicating he was still considered a rank outsider even in a two horse race. One gutsy gambler made $2.5 million betting on Trump’s victory, according to Betfair.

Meanwhile Trump is currently the bookies’ hot favourite to get re-elected next November: Ladbrokes have him at 11 to 10. By contrast the chances of Elizabeth Warren winning the presidency are 9 to 2 and Joe Biden is at 5 to 1.

Paradoxically in the gambling hub of Macau all bets were off when it came to the election of the territory’s new leader. That’s because there was only one candidate: Ho Iat-seng was elected unopposed as chief executive-designate by a committee of 400 local representatives at the end of August.

Ho takes on the role in December. His election victory was approved last week by the State Council, and its spokesman was complimentary, describing the city’s new boss as “up to the central government’s standard for the position, as he loves the country and Macau, and is trusted by the central government”.

Born in Macau to a wealthy family, Ho’s ties with mainland China are extensive after studying there as a young man and serving for many years on the National People’s Congress. He served as the president of Macau’s legislative Assembly, before resigning as a precursor to getting Macau’s top political job.

His campaign has talked about making government more efficient and the local media has sounded approving of his main career as a businessman, saying that it makes him a man who will get things done. But Ho will be taking office at a difficult time, with gaming revenues down sharply this year and the economy dipping into a technical recession after two consecutive quarters of negative growth. The number of punters turning up has been hit by a slew of unwelcome factors, including the drag on the Chinese economy of the Sino-US trade war.

Also getting a fair amount of comment is his lack of direct ties to the casino industry, with the suggestion that this might make him more willing to overhaul the all-powerful sector. At the very least he’ll need to oversee the retendering for six gaming licences, all of whose concessions expire in 2022. The retendering process has already been delayed and there is speculation that the outcome is being complicated by the trade war with Washington, with the American casino operators such as Wynn Macau and Sands China becoming potential pawns in a wider battle (see WiC431).

Those affected would include Sheldon Adelson, chairman of the Las Vegas Sands, and the biggest financial backer of Donald Trump’s last presidential campaign. Adelson operates three major casino hotels. Any indication they’ll miss the cut will have the greatest impact between now and Trump’s re-election bid next November when the issue could spice up the trade talks.

Ho has been careful to avoid specifics on the relicencing plan, noting only that a “healthy” gaming sector is crucial to the broader development of Macau’s economy. Like previous chief executives, he has been talking about diversifying the economy away from its reliance on gaming, although progress here has been slow. In the meantime he will persist with his predecessor’s policy of pushing the casinos to double the share of revenues they earn from non-gaming (currently about a fifth). They have already responded by investing in a better selection of hotel rooms, dining options and retail choices. But policymakers want to see something much more transformative in arts and exhibitions, world-class entertainment and business conventions.

Ho will probably demand something similar as part of the bargain for licence renewal. Nonetheless he will want to avoid too much upheaval for the casinos, which deliver the vast majority of the city’s taxes – he took a conservative line in his comments last month that “many people expressed they do not want to mess up Macau”.


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