With planned $1.9 billion Macau resort, family enterprise hopes to extend winning run
Casino billionaire Francis Lui fakes a puzzled frown as he poses for a photo behind a mountain of chips at a baccarat table normally reserved for high rollers who bet as much as $250,000 a hand.
"Do you want me smiling or poker-faced?" he says with a baritone laugh that reverberates in the wood-paneled penthouse suite of his StarWorld Casino in the Chinese gambling enclave of Macau.
Flanked by willowy hostesses in split-to-the-thigh cheongsams, the conservatively dressed and bespectacled Lui, 55, has much to smile about. His family-controlled Galaxy Entertainment Group holds one of six licenses to operate casinos in the biggest casino market on Earth.
Macau, a former Portuguese colony on the South China coast that's half the size of Manhattan, is the only place in the world's most populous nation where 1.3 billion Chinese are permitted to gamble in casinos.
Revenue from casinos in the territory, 37 miles southwest of Hong Kong, soared 58 percent to $23.5 billion last year - more than quadruple the $5.8 billion gambled on the Las Vegas Strip, according to statistics compiled by both jurisdictions.
The rise in Hong Kong-listed Galaxy's share price is as impressive. As of March 8, the stock had more than tripled to HK$10.92 from HK$3.21 at the start of 2010. The shares have outperformed those of such rivals as Sheldon Adelson's Las Vegas Sands, Steve Wynn's Wynn Resorts, Australian billionaire James Packer's Melco Crown Entertainment and Stanley Ho's SJM Holdings.
On March 10, the Lui family announced the opening this spring of its biggest development. The $1.9 billion, 2,200-room Galaxy Macau resort will feature five gaming areas with a combined floor area equivalent to three football fields; three hotels; 50 restaurants; and, on the roof, a palm-fringed beach with 350 tons of white sand imported from neighboring Guangdong province and lapped by artificial waves.
Meanwhile, the dominant figure in Macau gaming for the past half century may be fading from the scene. On Jan. 24, Ho, 89, appeared to surrender control of the company that operates 20 of Macau's 33 casinos. SJM notified the Hong Kong Exchange that Ho had transferred his shares in Lanceford, a family company, to relatives, effectively ceding ownership of Sociedade de Turismo e Diversoes de Macau, the company that controls SJM.
Two days later, Ho, who fathered 17 children by four women he refers to as his "wives," filed a lawsuit alleging that two wives and five children had illegally grabbed control of his assets. Ho withdrew the suit March 10, saying his legal dispute with family members had been resolved. The announcement drove up SJM share prices, which had lost more than 7 percent in value within weeks.
As the Ho dynasty trembles, the Lui family, whose five casinos account for 12.5 percent of Macau's gaming revenue, is betting it can extend a winning run. The Luis have a track record of defying the odds. Chairman and founder Lui Che-woo, 81, arrived in Hong Kong in 1934 as a 4-year-old refugee from war-ravaged mainland China. Francis Lui says that at the age of 13, his father was helping support his family by selling food on the streets of the British colony before making his first pot of gold trading war surplus equipment and then moving into construction, property and hospitality.
Today, with three sons and two daughters, Lui Che-woo presides over a multinational empire that includes U.S. hotels, office towers in China, quarries in Hong Kong and the Macau casinos. Although Francis Lui declines to discuss the family's wealth, its holdings in Galaxy and K Wah International holdings alone are valued at about $3.5 billion.
Success with the new venture is no one-way bet. Although Macau, like Hong Kong, is an autonomous special administrative region of China, its surging casino revenue hinges on the policies of the government in Beijing, which controls the movement of people across the border.