Harrah’s eyes Macau address

Feb 9, 2010 5:00 PM

Gaming Insider by Phil Hevener |

Harrah’s makes no secret of an interest in a Macau address for its Caesars brand but the likelihood of it buying a piece of anything now owned by Melco Crown Entertainment (MPEL), as recent speculation might have us believe, is somewhere between slim and non-existent.

There is little reason to believe new Macau casino licenses will be issued any time soon, meaning that any company hoping to find a place there must deal with one of the six existing licensees.

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That limits the possibilities if you consider that Harrah’s is probably not going to pursue a deal with either Stanley Ho or the companies in which his son and daughter (Lawrence and Pansy Ho) are principals. Lawrence is president of Melco, Pansy is a 50 percent partner in the MGM MIRAGE (MGM) casino.

You have to wonder if the speculation about Harrah’s buying into Melco was floated just in time for Lawrence to squash it like a bothersome bug during last week’s quarterly conference call.

As much as Harrah’s wants a Macau casino venture, doing anything with one of the Ho children (Stanley is not going to sell anything) would ignite a firestorm of prolonged hearings in some of the U.S. jurisdictions where Harrah’s is already doing business and where there is always an interest in beating up on casino owners.

Yes, it’s easy to imagine members of the Harrah’s executive team giving each other pinched looks, declaring, "We don’t need that kind of %#@&*."

Harrah’s operates or is planning to develop gaming projects in so many different jurisdictions that the politics of regulation are always a concern as it looks to continue growing.

The New Jersey Division of Gaming Enforcement took years to investigate the MGM relationship with Pansy Ho in Macau before filing a negative report that remains unresolved. And MGM only owns half of one casino, the Borgata, which is actually operated by its partner Boyd Gaming (BYD). Harrah’s, on the other hand, owns and operates about half of the Atlantic City Boardwalk.

But Harrah’s will eventually do okay for itself in Macau. Several years ago it bought about 175 acres of golf course land with frontage on the Cotai strip near the bridge that connects this area of reclaimed acreage with the mainland. Harrah’s has considered a number of possible uses for this property, uses that might involve extensive commercial development such as what one source termed "a world class medical center."

People who follow the fortunes of Harrah’s across the landscape of the gaming and entertainment business should not forget that its two private equity owners, TPG Capital and Apollo Management, own a variety of companies with interests that reach into mainland China all the way to Beijing

TPG has been one of the longest-standing foreign private equity investors in China, but as a business publication explained, "The firm has been stepping up its presence in China even more in recent months."

Good connections mean there is more than one way to make money in a boom town such as the one Macau has become since the former Portuguese enclave reverted to mainland control and development was opened to gaming companies other than those owned by Stanley Ho.

Question? Comment? E-mail me at: Phil Hevener