- Stephen Hung’s flamboyant Macau project at risk of falling through
- Chinese crackdown on gambling and corruption and strong competition casting shadows of doubt
Stephen Hung, a billionaire banker who invested a lot of money in a VIP casino project in Macau might be having some regrets after the recent developments in China had profoundly affected the VIP market in Asia’s gambling hub, reports Financial Times.
Namely, Chinese President Xi Jinping has gone all out to stop corruption and illegal gambling operations in the country, which reflected adversely on the Macau gambling industry as well. It took Hung years to get his project all ready to go and now he is almost here. All he needs is a concession and a serious financial injection to finalize his eccentric endeavor.
Macau gaming industry experienced its peak back in 2014. Ever since it’s been steadily declining, and the recent crackdown in China was a severe blow. Macau is the only part of China where gambling is allowed, and it counts on the VIP Chinese gamblers for a large share of its incomes. With the interest of VIP players fading, the former Portuguese colony has been somewhat struggling.
In this uncertain atmosphere, Hung’s $1.3 billion casino project has become a rather risky endeavor. The 13 Holdings, the Hong Kong company owned by Stephen Hung and in charge of the new Macau casino, has been struggling to raise the capital necessary to finalize the project.
According to Financial Times, in March of this year, The 13 Holdings’ liabilities exceeded its assets to the tune of HK$300 million ($38 million). Additionally, HK$951 in capital commitments haven’t been realized as of yet.
Flamboyant project misses the beat
Hung went all out with his Macau project, buying no less than 30 Rolls Royce Phantoms, training professional butlers, and even hiring one of the direct descendants of French royalty to advise on the matters of luxury. With 200 luxury rooms and a suite which would cost $130,000 a night, the Macau complex was clearly targeted at crème de la crème of gamblers. However, it may have missed the beat.
With the market in its current condition, the flamboyant project may not yield the kind of proceeds the investors were hoping for when the idea was first born. Consequently, the value of The 13 Holdings shares has drastically fallen since 2014, experiencing an 86% drop over the past three years. Right now, the company market value stands at just $255 million.
Mr. Hung is still intent on completing the project and is in the process of raising the necessary capital. However, even if he succeeds in finding the necessary financial backing, it will only solve a part of his problems. To operate in Macau, the new high roller casino will also need to enter a deal with one of the six Macau casinos that own the operating license and procure licenses from the Macau government for individual tables.
All this happening at the time of gambling and corruption crackdown in China doesn’t make things any easier.
Finally, due to all these unexpected delays, even if everything goes smoothly from now on, The 13 would be opening its doors together with a number of other big casinos currently under construction in Macau, adding even more pressure and increasing doubts.
Any way we look at it, Mr. Hung and his investors are in for a rough ride, and they’ll have to overcome numerous difficulties if they want their ambitious project to come out on top.
Whether they’ll succeed or not depends on their efforts but also on many outside factors they have no control over, like the competition and gambling laws in China that have been less than favorable to Macau operators as of late.
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