Melco's Billionaire Ho Sees Macau Gaming Returning to Peak

(Bloomberg) -- Macau, the world's largest gaming center, will return to its peak within the next five years, said Melco Resorts & Entertainment Ltd.'s billionaire Chairman Lawrence Ho.

Ho, who is also vying for a casino license in Japan, is “extremely bullish” on Macau, he said in an interview on Bloomberg Television with Haslinda Amin.

“Definitely within the next five years, it will grow back to the $45 billion gaming market,” said Ho, who also serves as chief executive officer. “And that's just the gaming alone, because the non-gaming part is significant.”

Ho's projection is one of the most upbeat for Macau's gaming industry, which reached its highest annual peak in 2013. The industry then struggled as high-stakes players stayed away from China's sole gaming hub amid Beijing's corruption crackdown. The industry's recovery is now gaining traction, with gaming receipts in April rising for a ninth consecutive month.

Macau's April casino receipts rose 16.3 percent to 20.2 billion patacas ($2.52 billion), beating the median analysts' estimate of a 15 percent rise. April's gain was the third consecutive month of double-digit growth for the industry. Casinos including Melco and Las Vegas Sands Corp. have shifted focus to attract casual gamblers and families, while high rollers have also returned to the tables in recent months.

Ho's $45 billion projection for the industry is an “achievable target for Macau,” said analyst Grant Govertsen of Union Gaming Group LLC. The recovery's sustainability will hinge on continued, strong growth in the mass market segment that attracts casual gamblers.

“That type of growth would imply around 10 percent average annual growth, which feels realistic at this point,” said Govertsen. “The good news for Macau is that the government has anointed mass market as the future of Macau, and we would expect at least some level of support going forward to ensure mass continues to be the direction Macau is headed.”

The performance of Macau's casino stocks reflect the optimism. Bloomberg Intelligence's index of Macau gaming shares have increased 22 percent this year, compared with the 12 percent gain in the benchmark Hang Seng Index. Shares of New-York listed Melco have jumped 41 percent this year, while the Nasdaq Composite has gained 13 percent.

Japan Prospects

Ho was also optimistic about the prospect of entering the Japanese market. Japan legalized casino gambling last year, and legislation on the rules for the industry will be introduced in coming months. He forecast it could “easily” be a $20 billion market if cities such as Osaka or Yokohama had one or two casino resorts.

“If it's $20 billion divided by two or three or four operators, that would be very significant,” he said.

To read a QuickTake on Japan's casino bet, click here.

Given Japan's potential, Ho said Melco “will do whatever it takes” to get a Japan casino license. Earlier this year, Ho pledged to spend “whatever it takes” to win a casino license in the country.

“We don't want to put a dollar figure on it because ultimately, the opportunity is priceless,” he said.

To contact the reporter on this story: Sterling Wong in Singapore at swong470@bloomberg.net.

To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Sam Nagarajan