For Macau's Stanley Ho, a Family Feud

From the moment you step on a plane or ferry to get to Macau, check into a new luxury hotel on the gaming mecca's waterfront, or dine at the city's three-Michelin-star restaurant, you will likely put money into the pocket of billionaire Stanley Ho. And that's before you hit the casino tables.

Ho's four-decade gambling monopoly, which ended in 2002, allowed him to build an empire that covers virtually every facet of the former Portuguese colony's economy. Even with recent competition from U.S. rivals such as Las Vegas Sands (LVS) and Wynn Resorts (WYNN), the Ho family takes more than 50 cents of every dollar bet in the enclave—the only part of China where casino gaming is legal.

"You can't find another city where a single family has such a high concentration in an industry that accounts for 40 percent of GDP," says Credit Suisse Group (CS) analyst Gabriel Chan. "And you can find their footprint in the other 60 percent as well."

Now a battle is being waged over the empire by two of Ho's four "wives" and some of their 16 children. At stake is control of Ho's 31.7 percent holding in privately held Sociedade de Turismo e Diversões de Macau, or STDM, which has stakes in casinos, construction, luxury hotels, and Macau's airline.

The family feud became public on Jan. 24 after Ho, 89 and ailing, accused two of the women he calls his "wives" (his one legal wife died in 2004) and some of his children of trying to seize control of Lanceford, the family company that holds his STDM stake. He said the power grab went against his wishes that his fortune be shared among his four families.

Named in a suit Ho filed in Hong Kong are third "wife" Chan Un-chan, second "wife" Lucina Laam King-ying, and her five children including Pansy and Lawrence, who have gambling interests of their own in the city. Pansy, 48, has a joint venture with MGM Resorts International (MGM) that has about a 15 percent market share, estimates Credit Suisse's Chan. Her 34-year-old brother, Lawrence, has a 50-50 partnership with Australian billionaire James Packer in Melco Crown Entertainment (MPEL), which controls an additional 10 percent of the market. Also named in the suit are their sisters Maisy and Daisy, both executives of another publicly traded part of their father's empire, Shun Tak Holdings.

Ho said in a video interview with his lawyer on Jan. 25 that the relatives named in the suit had bullied him into signing a document transferring Lanceford shares to them in what amounted to "something like robbery." His stake in the family company was diluted from 100 percent to just 0.02 percent, according to Hong Kong records. The suit seeks a court order to bar the relatives from dealing in Lanceford shares.

Gaming is Macau's sweet spot; the city's $23.5 billion in gambling revenues last year was four times that of the Las Vegas Strip, according to government data. Ho built SJM Holdings, 56 percent owned by STDM, into Asia's biggest publicly traded gaming company. It operates 20 of Macau's 33 casinos, with a 32 percent market share, according to Chan.

STDM is the city's largest private employer, providing jobs to everyone from stable boys at the city's horse- race track to sommeliers at the Michelin three-star Robuchon a Galera restaurant, where a plate of sautéed veal with black truffle jelly costs HK$1,480 ($190).

STDM's less glamorous holdings include a 33 percent stake in Macau International Airport and 14 percent of Air Macau, which brings gamblers from cities such as Beijing and Taipei. Shun Tak dominates the ferry and helicopter services that link the city to Hong Kong, and operates the buses to the Chinese mainland that brought more than half of Macau's 25 million tourists in 2010.

Ho, whose net worth is estimated by Forbes magazine at $3.1 billion, also earns money from Shun Tak's 50 percent stake in One Central, a complex of seven 40-story luxury apartment buildings and the Mandarin Oriental Macau hotel that dominates the waterfront on the Macau peninsula. Gambling revenue also flows to Ho through his ownership of the horse-racing track, run by the Macau Jockey Club, and the Canidrome greyhound-racing arena. Thrill seekers can ascend the city's tallest building, Shun Tak's 1,109-foot Macau Tower, which sits on land reclaimed by STDM, and then launch themselves off the world's highest urban bungee plunge.

Even in death, there's no escape from the reach of Ho's empire: Shun Tak says it is building a columbarium for the cremated remains of people from China and land-scarce Hong Kong and Macau on an island south of the city.

The bottom line: Stanley Ho is battling some of his four "wives" and 16 children for control of an empire that touches almost everything in Macau's economy.

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