Hos Still Rule in Macau as China Restricts Casino Growth

Infrastructure, labor, and inflation problems have grown acute due to the explosive growth, and the Chinese government is acting to limit expansion and curtail these problems.

The number of casinos in Macau has more than doubled, to 29, since Stanley Ho's monopoly ended in 2002 with the awarding of new casino licenses, and more than 30 million people visited the former Portugese enclave in the past year. Infrastructure, labor, and inflation problems have grown acute due to the explosive growth, and the Chinese government is acting to limit expansion and curtail these problems.

Gambling revenue grew by 50% in 2007, and is projected to increase to 70% this year, according to Stanley's son Lawrence Ho, CEO of Melco Crown Entertainment. Melco is a joint venture between Lawrence and James Packer of Crown Casino fame. Lawrence's sister, Pansy, is a partner in the MGM Macau.

The growing need for labor and employees drawing from virtually the same size work force has caused spiraling wages, leading to double-digit inflation. Infrastructure is simply not at the stage at which such massive numbers of tourists can be transported into, out of, and around the territory.

Chinese provinces, which supply about 60% of Macau's visitors, have begun to limit travel to Macau to no more than once a month. No new licensees will be accepted until a future change in policy, and existing operations will have limits placed on the number of table games and slot machines they may contain, according to statements by Macau Chief Executive Edmund Ho.

Whether this will include ongoing expansions, such as the two multi-billion dollar ventures planned by Melco to join its existing Crown Macau, cannot be foretold with certainty. One thing that is without doubt: in Macau, having a Ho on your side  still makes all the difference.