Richest in PH, Macau, Australia in casino deal

MANILA, Philippines (UPDATED) - The Philippines' richest, Australia's 4th richest, and Macau's gambling tycoon are reportedly betting on a casino-entertainment venture in Manila.

Major media groups in Australia said on Wednesday, June 27, that Crown Limited's James Packer and gambling tycoon Lawrence Ho had entered into a deal with Henry Sy's Belle Corp to build a $1-billion casino-resort in the upcoming Pagcor Entertainment City.

Cora Guidote, senior vice president of Sy-led holding firm SM Investments, confirmed the Australian Financial Review's report that the casino plan is in the works. "These are just talks for now. Nothing is final," she told the Agence France Presse. Despite Guidote's insistence that no deal was imminent, the Review said that Packer and Ho flew to Manila on Tuesday to sign the deal that could be announced as early as this week.

A deal is considered another vote of confidence in Manila as a casino investment destination for major foreign players after Japanese slot-machine billionaire Kazuo Okada also made his stake earlier.

Belle Corp, a unit of SM Group controlled by the Philippines' richest man, and Okada-led Universal Entertainment are two of the 4 groups awarded by the Philippine regulator licenses to build and operate their own tourism-casino complexes at the reclaimed area near the Manila airport and along the Manila Bay. 

Packer, one of the world's billionaires according to Forbes magazine, is behind Crown Limited, which owns two casinos in Australia and a 33% stake in a joint venture in Macau, currently the world's gambling mecca.

In a landmark $2-billion deal with controversial media mogul Rupert Murdoch, Packer recently sold his family's stake in Consolidated Media, his group's last major media asset, all but ending his family's 94-year role in Australian publishing and broadcasting.

Packer exited the media industry in favor of casinos. The media interests are part of the $50-billion empire he inherited from his father Kerry Packer in 2005.

Packer-Ho ties

Packer and Ho have a casino joint venture called Melco Crown Entertainment, which holds around 15% of the market in Macau, the only place in China where gambling is legal.

Melco operates several projects, including the boutique casino Altira and the integrated urban entertainment resort, City of Dreams. It is set to open another casino complex, the Macau Studio City, by 2015.

Ho is among 17 children of ailing Macau casino mogul Stanley Ho from 4 wives.

He faces a law suit from his father, who is fighting to retain control of his sprawling casino empire.

The older Ho had monopoly on Macau for 4 decades and now still controls a signficant share of more than 30% of the gambling market.

His fortunes started to gain much attention after he met an accident three years ago and became absent from the public eye.

Philippines in gambling map

The reported venture among Sy, Packer and Ho gives the Philippines a boost in its goal of becoming a major gaming destination in the region.

The country is trying to shed off its perennial “sick man of Asia” tag with President Benigno Aquino III's staunch good governance and anti-poverty promises, as well as high-growth trajectory.

Investors are placing their bets in the country, which has posted a healthy economic growth of 6.4% in the first quarter, putting it the second best performing in Asia. The Aquino government has trumpeted the upcoming casino-entertainment complex as part of efforts to help boost its goal to increase tourist arrival to 10 million in 2016 from the current 4.2 million.

Gaming is "a supply drives demand story," meaning putting more casinos in a destination increases the overall appeal and business of that area, according to regional gambling expert Gabriel Chan, the Director for Non-Japan Asia Gaming and Lodging for Credit Suisse.

Chan told Rappler in May he expected gambling in Asia to hit a 'tipping point' where the sector reaches a critical momentum, tips past its threshold and spreads unstoppably.

Chan said Macau is more focused on high rollers with VIPs making up more than 70% of gross gambling revenue. But the Philippines could service the mid-level gambler whose money is considered negligible to Macau, explained Tina Garcia, the Head of Investor Relations for Filipino developer Travellers International Hotel Group.

Gambling in the region is expected to increase with rising levels of disposable income and cost of living. Within the Association of South East Asian Nations (ASEAN), the middle class population is expected to rise from 24% in 2010 to 65% in 2030 disclosed the Asian Development Bank during its annual meeting on May 2.

Gamblers and investors

Analysts cited by media reports point to the ability of casino operators to offer high-value clients various destinations in their network -- from Australia to Philippines to Macau.

The Philippines is attractive for gambling investors as it's the newest on the gambling map.

Packer's Crown, for example, wants to increase its 10% stake in Echo Entertainment Group, which operates The Star casino in Sydney and 3 casinos in Queensland. These casinos are apparently key to Packer's plan to have a portfolio of casinos in different locations within Australia.  

However, Crown is up against Malaysian gambling group Genting that also wants to increase its 9.9% stake in Echo, which is prohibited under the Australian local regulator's laws to be owned by a single entity unless it is given consent.

The race for a bigger stake in Echo is not as pronounced in Manila where Genting Malaysia Bhd also has a partnership with Alliance Global group, one of the four franchisees in the Pagcor Entertainment City and controlled by the Philippines 6th richest man, Andrew Tan.

All the Filipino licensees in the upcoming gambling and entertainment complex are in the Forbes richest list. Bloomberry Investment Holding's Enrique Razon Jr, the 3rd richest. Their licenses were awarded in 2008 and 2009 and all have to invest at least $1 billion over 5 years. - Rappler.com

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