According to US media reports New Jersey gaming regulators have advised that MGM Mirage should be “directed to disengage” from its Macau joint venture partner, Pansy Ho, the daughter of gambling tycoon Stanley Ho.
MGM Mirage revealed the report from the New Jersey Division of Gaming Enforcement in a filing with the US Securities and Exchange Commission on Tuesday.
So what does this mean for James Packer and his Crown casino company?
James Packer and Crown are in a joint venture called Melco Crown covering one existing Macau casino with the second, The City of Dreams, about to open next month. Their partner is Lawrence Ho, a son of Stanley Ho. No finding has been made by regulators about this relationship, but news of the latest one from the US involving Mirage comes at an inconvenient time for Crown.
Crown is currently involved in a prominent court case in Melbourne involving a gambler in which lurid and dramatic allegations have been made by the person accusing Crown.
At the moment Crown is not involved in the Atlantic City Casino industry, but such a finding would be taken into consideration by other regulators, if allowed to stand unchallenged. Crown does have the reworked agreement covering casinos in Las Vegas and Pennsylvania, and has a deal still afoot in Canada.
Stanley Ho has been a donor to the ALP in Australia in NSW and federally and has tried to obtain casino licences unsuccessfully in Sydney and Perth.
The MGM Mirage ruling is believed to be the first by a US regulator against Pansy Ho, who has a 50% stake in the struggling $US1.25 billion MGM Grand Macau. The casino opened in Macau in December 2007 and has been struggling financially, as has MGM’s Las Vegas casinos and projects. MGM is on the edge financially, although it has just refinanced $US2.5 billion in a private and public issue.
MGM Mirage’s partnership with Ms Ho was approved by regulators in four other US states – Nevada, Illinois, Michigan and Mississippi – where the company operates casinos. Failure to secure New Jersey’s blessing could put its Borgata casino licence in Atlantic City in jeopardy.
In the SEC filing MGM Mirage said that the DGE could only make recommendations to the New Jersey Casino Control Commission, which has the power to issue and revoke licences.
“The DGE is responsible for investigating licences and prosecuting matters before the New Jersey Commission,” the chief Financial Office Daniel D’Arrigo said. “However, the report is merely a recommendation and is not binding on the New Jersey Commission.”
He said the DGE report, completed on Monday but not released, had found that MGM Mirage’s partner was “unsuitable” and that its due diligence and compliance procedures were “deficient”.
“The New Jersey Commission has not yet taken any action with respect to the report, including whether or when a hearing should be scheduled.” He said MGM believes the report will not have a material adverse effect on it.