The Prince of Gambling

While the words "tycoon" and "magnate" might be the first to come to mind when talking about Lawrence Ho, it would be much more fitting to call the man behind Melco International a "formidable force."

The 42-year-old Hong Kong native bears the weight of a famous father, which is made even harder by the fact that the two operate multi-billion dollar businesses in the same industry.

Lawrence is the only son and the youngest of seventeen children of Stanley Ho, the Macau gambling tycoon, founder and Chairman of SJM Holdings. The 98-year-old billionaire was born into one of Hong Kong's wealthiest and most powerful families, which saw its wealth disappear during the great depression.

Forced to abandon his studies by the outbreak of World War II, Ho made his fortune smuggling luxury goods into China during the war. The construction boom that ensued in Hong Kong following the war helped Ho triple his wealth, which allowed him to win the monopoly over gambling in Macau in 1962.

Since then, Ho has changed not only the gambling industry but Macau itself - it is virtually impossible to visit Macau without putting money in Ho's pockets, as his holding company covers almost every facet of the island's economy.

"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." Gabriel Chan, an analyst at Credit Suisse Group, told Bloomberg.

"And you can find their footprint in the other 60 percent as well."

Born to the King of Gambling, Lawrence Ho witnessed firsthand just how lucrative the gambling industry really is. After graduating from the University of Toronto, Ho was appointed the group managing director of Melco International Development Limited, one of the oldest companies in Macau.

An Unlikely Friendship

Ho's efforts to free himself from the legacy of his kingpin father have made him an unlikely friend - James Packer. Packer was bearing a similar burden - living up to the legacy of his father, Australian media tycoon Kerry Packer. 

Kerry and James Packer

Looking to abandon the media and focus on international gaming and tourism, Packer crossed ways with Ho in 2004, as he was considering leaving the media and moving into the gambling and tourism industry. At the time, the Macau government broke the monopoly Stanley Ho held over the island's gambling industry, opening up a window to competitors.

Riding on the wave of success he brought to Melco, Ho rushed at the opportunity. He believed his father's company was "not the way to go for the future," and wanted to make Macau a modern tourist destination that offered more than just gambling.

His search for a partner took Ho all the way to Las Vegas, but the reputation the Packers had in Australia drew him to Sydney. Ho's first meeting with James and his father Kerry ended unexpectedly well - Melco Crown, a joint venture between the two's companies was formed shortly after. While the partnership was a smart business decision for both, Ho believes the immediate connection he made with Packer was pivotal in the deal.

Lawrence Ho, Stanley Ho, and James Packer 

"We both had legendary fathers with massive legacies, and I think for us it was always trying to step out of that massive shadow and at [the] same time build our own legacy," Ho said in an interview with the Sydney Morning Herald.

The first thing on the agenda for the newly formed company was the development of a $3 billion casino in Macau. However, to do that, the two needed to secure a gambling license.

"If we didn’t have our own license to operate we would have had to rely on one of the revenue-sharing arrangements with one of the existing licensees. That would have been disastrous in my opinion ... you would be at the mercy of somebody," Ho recalled.

The last remaining gambling license, however, was in the hands of Steve Wynn, an American casino magnate and main competitor to the Ho family. In 2006, Melco Crown bought the license from Wynn for $900 million and then raised the funds needed to pay for it.

Lawrence Ho, Steve Wynn, and James Packer

Ho called this "a defining moment" for the two.

Work soon began on their $3 billion project, called the City of Dreams. The construction briefly halted in 2008 when the global financial crisis struck Macau, but the company managed to plow through the hardships and open the first phase of the City of Dreams in 2009.

The joint venture operated as Melco Crown until 2017, when the company dropped the Crown name and rebranded as Melco Resorts & Entertainment when Packer sold off his stake in the company.

Ho's multi-billion dollar projects adopted a vastly different strategy than the one headed by his father. Stanley Ho made his fortune by targeting tourists from mainland China - everything from the over-the-top European decor to the setting of the gaming tables was tailor-made for the average tourist.

Melco's casinos, on the other hand, target a much more sophisticated audience. The company's latest venture, Morpheus, was designed by Zaha Hadid and is regarded as a gem of modern architecture. It almost stands as a monument to Ho and the new breed of gaming resorts he brought to Macau. 

Morpheus Hotel and Casino in Macau

Living in the Shadow of Stanley Ho

It's hard to say whether this is was a natural evolution of Ho's company or a calculated plan to distance himself from his father and the old breed of casinos he represents. Stanley has long been accused of having close ties with Triad criminal gangs, which resulted in both the New Jersey Division of Gaming Enforcement and a US Senate committee launching investigations.

While Ho continually dismissed any business or private connections to his father, the accusations proved to be a major stain on Melco's reputation and its ability to expand its business globally.

"I think his company is a bit of a joke – it is a competitor. My association with him is the fact that I am his son. But apart from that, I run my businesses and my life pretty much separate from him."

Crown had a hard time acquiring the license to operate Sydney's newly built Barangaroo comply until they agreed that Stanley Ho would not be involved in the business.

Then, earlier this week, news broke that Packer had sold 19.99 percent of ASX-listed Crown to Ho's Melco Resorts & Entertainment. The $1.76 billion acquisition effectively capped the value of shares held by other Crown Resorts investors, killing any chance of a full takeover of the company.

But it could have ended much differently for Packer - in April, the news about Steve Wynn's $10 billion cash and scrip takeover offer leaked, forcing him to abruptly end talks with Crown. Ho was quick to jump to the opportunity, saying he called Packer directly with an offer.

The two's fifteen-year friendship made the process quick and easy. Ho said the entire deal was wrapped up in three weeks.

"There [were] no banking advisers whatsoever. Unlike the Wynn and Crown deal where they had a whole bunch of lawyers and a whole bunch of bankers involved, we didn’t have that," he told the Sydney Morning Herald.

Melco said that it is interested in buying off more of the company and taking a board seat in Crown. However, the company needs approval from Australian regulators - a process that could take up to a year to complete. While Ho has passed probity with the West Australian and Victorian Governments in 2004, he said he expects the scrutiny he will face to increase this time around.

Ho's 12-month long ordeal with the Australian government will be great practice for his global expansion plans. Melco is currently vying for a license in Japan, as the country's capital currently has three licenses on offer.

“For us, this Australia transaction is a great demonstration for Japan,” he told Bloomberg.

“The social safeguard in Australia is the best in the world, so we can show it to Japan where gaming addiction is a big concern. It’s a huge plus.”

After giving up a controlling stake in Russian casino operation Summit Ascent, Ho opened a regional office in Osaka to seek partnerships and improve his profile in the country.

"Everything we built up until now has been to build up a great showcase to Japan,” he told Forbes earlier in February, adding that there would be no "upper limit" to his investment in the country.

With Japan as the end goal, Melco is expected to make a full takeover bid for Crown, as it would make it the front runner for one of Japan's three gambling licenses. Its dominance over the gambling industry in Macau, strong presence in Manilla, and ownership or Australia's largest gaming and entertainment group might be enough to overshadow his family name.

Sources:

1. https://en.wikipedia.org/wiki/Lawrence_Ho
2. https://en.wikipedia.org/wiki/Stanley_Ho
3. https://www.forbes.com/sites/pamelaambler/2019/02/13/hong-kongs-richest-2019-lawrence-ho-expands-his-empire/#627cf4de6fd8
4. https://thewest.com.au/business/mergers-and-acquisitions/melco-resorts-entertainments-lawrence-ho-rolls-the-dice-on-japanese-licence-with-james-packers-20-per-cent-of-crown-resorts-ng-b881217047z
5. https://www.smh.com.au/world/asia/the-sons-also-rise-macau-casino-tycoon-on-his-long-bond-with-packer-as-he-swoops-in-for-crown-stake-20190601-p51tel.html
6. https://www.smh.com.au/business/companies/crown-investors-say-goodbye-to-takeover-bonus-after-packer-selldown-20190531-p51t7d.html
7. https://web.archive.org/web/20121015125404/http://www.thestandard.com.hk/news_detail.asp?pp_cat=21&art_id=107677&sid=31123532&con_type=1&d_str=20110201&sear_year=2011
8. https://www.asgam.com/index.php/2019/06/03/australian-probity-checks-into-melcos-lawrence-ho-could-take-more-than-a-year-after-crown-acquisition/