‘Total nonsense’ makes a lot of sense

Maybe "total nonsense" is Lawrence Ho's secret code phrase for "the paperwork hasn't been signed yet."

I can't take credit for the remark. It belongs to a gaming insider who believes Harrah's Entertainment may finally enter Macau.

Sterne Agee gaming analyst David Bain first detailed Harrah's interest in buying Australian billionaire James Packer's 32.5 percent stake in Melco Crown Entertainment. Ho, Melco's chief executive officer, dismissed the news.

But the deal makes sense.

Harrah's missed out on Macau's original gaming expansion. Casino rivals Wynn Resorts Ltd., Las Vegas Sands Corp. and MGM Mirage gained a foothold.

Packer bought Wynn's subconcession for $900 million in 2006 and formed a joint venture with Ho, the son of controversial billionaire and Macau casino kingpin Stanley Ho.

Harrah's was negotiating with Wynn for the Macau rights but balked at the price. The company doesn't want to make the same mistake twice.

As an equity investor, Harrah's would have ownership in Melco's two Macau resorts, the struggling City of Dreams on the Cotai Strip and the Altira Macau on Taipa. Analysts said City of Dreams needs the infusion Harrah's could provide.

Harrah's hoped Macau would increase its gaming concessions. With that thought in mind, the company bought the 175-acre Macau Orient Golf Course, now known as Caesars Golf Macau, for $577.7 million.

New Macau Chief Executive Fernando Chui has shown no interest in expanding casino operators beyond the original six.

In September 2007, Review-Journal photo director Jeff Scheid and I spotted Harrah's CEO Gary Loveman checking into The Venetian Macau. The look on his face seeing two Las Vegas journalists in the most unlikely place was worth the price of admission. That day, Harrah's announced the golf course deal.

Loveman told the Review-Journal in June he wanted to bring the Caesars brand to Macau. He made similar comments to Bloomberg.

A stake in Melco could make that thought a reality.

New Jersey casino regulators might scoff at the rumored deal.

Lawrence Ho may face scrutiny because of his father's alleged ties to Chinese organized crime, similar to how the state is treating his sister, Pansy Ho, a Hong Kong businesswoman and MGM Mirage's joint venture partner in Macau.

If the deal happens, will New Jersey view Harrah's, which has four Atlantic City casinos -- a quarter of the market -- with the same zeal regulators have gone after MGM Mirage, which owns 50 percent of the Borgata?

Howard Stutz's Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.