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Cotai Strip Evades SJM Holdings

Posted on December 20th, 2010

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Cotai may very well be out of reach for SJM Holdings for now. The strip, in the midst of Colane and Taipa, was reclaimed as a prime piece of property dedicated to the gambling industry much like the Las Vegas’ gambling strip. Cotai is filled in due to the fact that Macau is so small that it crams 550,000 people in a 29.5 kilometer area. The Macau government has decided to turn down the offer made by SJM Holdings to build a casino on the area. The rejection was the second of its kind after Sands China Ltd., has offered and was rejected the same plot of land. The land is a key piece as it stands in a very strategic place in the world’s largest gambling market.

Sands China was holding on to their claim on the land based on a handshake agreement with the government of Macau. Chief Executive Fernando Chui Sai-on of Macau, however, is now changing his stance as he now claims to diversify the country’s economy. Sands’ China has since filed an appeal against Chui Sai-on’s decision. The company has reportedly spent $US162 Million in preparation as they projected their casino would have been operational by 2016.All that would come to naught. Sands China and SJM holdings are rival companies in Macau’s booming gambling industry.

Officials stated in a letter addressed to SJM that any casino plans on the famous Cotai Strip should be subject to public tender. Sources said it was the same reason given to Sands China. “Macau land department has rejected both operators’ proposals and that a public tender could be waived when the concession is grounded in the public interest namely developing Macau into a world center for tourism and leisure, but that even in that case, the grant would need to be preceded by a public hearing.” a spokeswoman said on Friday. But SJM, the largest casino operator by revenue, is not ready to throw in the towel yet. SJM will try again to secure land rights in another part of Cotai this coming year after their failure to get plots 7 and 8. SJM is owned by gambling magnate, Stanley Ho, also known as Stanley Ho Hung San.

Ho, who is among the world’s richest and the wealthiest in Macau, applied for the land just next to The Macao Dome, a company operated and controlled by Angela Leong, who is Ho’s fourth wife and a member of the Legislative Council of Macau. His other wives are Clementine Leitao, Nam king-ying and Chan Yuen-chun. SJM is said to invest in a facility that doesn’t offer gambling. This establishment would resemble a theme park where families go to in vacations.

Macau reformed its land laws in 2008 which is to take effect in 2012. These new laws are designed to promote transparency in the grant system. The government has already declared that it would not allow new casino applications submitted after 2008 and will not grant casino projects without a public tender.

The law is set in motion after Ao Man-Long was arrested after numerous corruption charges for showing preference in 20 government projects and was said to have received bribes from real estate and construction entities. Ao, is the highest ranking official in Macao to be arrested thus far. The charges include 13 counts of money laundering, 40 counts of bribery, one count of incorrect declaration of assets, amongst others. He was sentenced to 27 years in prison. Ao has allegedly amassed 804 million patacas (US$ 100 million).

Experts believe, however, that the government is taking its sweet time and is taking too long to put the law to good use.”Before the law comes into effect, it’s not appropriate to give land to the gaming operators.” says Macau legislator Jose Pereira. Analysts claim land grants for proposed casino projects like MGM Macau and Wynn Macau won’t be affected as the projects will be awarded early next year. Angela Leong however has acquired land requests ahead of the casino operators. These lands are to be used for shopping malls, theme parks, indoor beaches and other amenities.