Sources familiar with the process still admit to PLATAFORMA today that the contract linking Las Vegas American know-how to Hong Kong Chinese financing “seemed designed not to be honoured”. The fact is that, in that very document — signed at the last possible moment to bring the two sides together for the tender — Galaxy stated, in black and white, that it had not had enough time to fully consider the agreement, thereby releasing itself from any obligation to comply with it on those terms. In practice, formal discussion of the contract was postponed… and never came to a successful conclusion.
Faced with an (un)expected legal and political imbroglio, one that threatened the tender itself and the timetable for gaming liberalisation, the Government created the controversial subcontract concession regime. The result was that, instead of the three gaming concessionaires that won the tender — with Beijing’s backing — in January 2002, there were already three more by February 2003: Galaxy sold a subconcession that is today operated by Venetian, thereby resolving the problem between them; Wynn immediately demanded the same prerogative and sold another to Melco Crown; and SJM replicated the operation with MGM.
Although the legal status appeared formally distinct — and subordinate — in practice, the relationship between concessionaires and subconcessionaires was non-existent. All operated autonomously, with the same set of rights and obligations vis-à-vis the State, both from a regulatory standpoint and in terms of tax burden.
Read more: Macau’s 2025 gross gaming revenue rises 9.1%, exceeds government target
That is precisely why it was controversial that it was the concessionaires — and not the State — that charged premiums to the subconcessionaires. The economic impact of this model meant, for example, that the cost of building Wynn’s first casino in Macau was fully covered by the subconcession fee charged to Melco. The winners of the tender saw competition doubled… but they chose to whom they would sell and made themselves paid for it.
Another sensitive issue managed simultaneously with gaming liberalisation was the succession struggle within Stanley Ho’s empire; this too was partly resolved through the subconcessions: Pansy Ho bought one — in partnership with the Americans of MGM — and remained close to her sisters (Daisy Ho now runs SJM); Lawrence Ho followed his own path — in partnership with the Australians of Melco.
The vast and complex non-family universe of SJM, which dominated the VIP rooms, was at that time absorbed into satellite casinos and junket companies — legalised and listed on the stock exchange. That system went on to dominate the industry for two and a half decades, attracting players and handling loans and debt collection behind the scenes of the six operators…
Read more: Macau’s Gaming revenues rise 4.5% in February
Taiwan with political overtones
Last but not least, the process that first brought Sands and Galaxy together — and then drove them apart — kept Taiwanese investors away from Macau, in a development with obvious political overtones.
Whatever the criteria of the tender, or the speculation over who might have been behind Asian America, Venetian was the clear favourite for one of the licences: Macau wanted that Las Vegas-tested model, where MICE revenue exceeds takings from gaming tables.
The fact is that it was first the Asian American Entertainment Corp (AAEC) that joined forces with Sands’ know-how, backed by the financial muscle of a banking syndicate in Taiwan. But it is also a fact that the only person ever to put his face to the project was Marshall Hao alone — and always Marshall Hao; by his own admission no millionaire, and in every court case claiming lack of means and requesting legal aid.
