Just when everything was looking hunky-dory for U.S. companies moving into Macao, who should pop out of the woodwork but the son of wastrel North Korean despot Kim Jong-il. It sounds like he’s a chip off the old block (and even uglier than Dad, if such a thing were possible) and he’s been hanging out in Macao for the past three years, it seems, mostly at the enclave’s luxury hotels.
If Junior’s been hanging his hat at any properties owned by Las Vegas Sands or Wynn Resorts … well, that would be a bit of a PR nightmare, wouldn’t it? The news report says that Kim Jong-nam has been spotted dining at Macao’s "plush casinos." (I guess that rules out any of Stanley Ho’s joints.) The North Korean consulate in Macao pleads complete ignorance of the situation. Yeah, and they’re probably shocked — shocked! — to find out that gambling is going on in Macao, too.
American casino companies would presumably prefer that the public (and regulators) not be reminded of Macao’s chummy relationship with Pyongyang. The State Department has condemned Macao as a hive of North Korean money laundering. And who operates a casino in Pyongyang (right next door to Communist Party HQ)? Stanley Ho. Who did MGM have to buy its subconcession from? Stanley Ho. Whose daughter did they have to take on as a partner? Stanley Ho’s. Once again, all roads lead to Dr. Ho. (Spokespeople at MGM Mirage get decidedly nettled whenever the subject turns to the elder Ho.)
Speaking of Pansy Ho … Nevada regulators may postpone their decision on her suitability as a business partner for MGM Mirage, pending new information. At this rate, execs at MGM may soon be able to toast the third anniversary of the Nevada Gaming Control Board’s probe. Normally when you have to explore that far deep, you need a bathysphere.
Meanwhile … analysts raise some questions about the amount of exposure facing some mega-developers in Macao, particularly with regard to exponential increases in retail (a quintupling of the current supply) and hotel-room inventory. Hotel occupancy hasn’t been keeping pace with capacity, so a collision (or at least a speed bump) between Macao’s status as a day-trip market and Western efforts to convert it into Chinese Vegas appears inevitable.
Closer to home … California’s Office of Problem Gambling released its 2006 prevalence study and found as many as 1.2 million Californians to be suffering from problem or pathological gambling. Disabled and unemployed people, and men in general, were found to be the most at-risk groups. When 3.5% of Californians have a gambling problem, I’d say it’s cause for alarm. Harvard researchers (and the casino industry itself) think a much lower percentage of adults nationwide are problem gamblers, but California offers far greater opportunity for gambling than many other states in the Union, so I see no reason not to take these numbers seriously, barring some major flaw in the survey’s methodology.
Rich man, poor man: Although he’s trying to hit up two of his dealers for $70K in court costs, I guess we don’t need to pass the hat for Steve Wynn just yet. The casino mogul gave himself a $500K raise today, which should keep him in toothpaste for a while to come. However, since his company has had only one profitable quarter out of the last four and not one profitable year, shareholders have a right to ask what justifies Wynn padding his salary by 18%, especially if the Wynner starts bellyaching about the effects of minimum-wage increases at the state and federal level.
