MGM Mirage to leave Atlantic City

For a number of years, New Jersey legislators are worried about the Chinese business partner of MGM Mirage, one of the largest land casinos in the world. MGM Mirage now has the answer, leaving Atlantic City. The casino company plans to sell half of the company.

MGM Mirage has already looked around for buyers but no deal has been reached. MGM Mirage hopes that the plan to leave New Jersey, will convince New Jersey regulators to cease the regulatory investigation into the company. Any additional investigations have the potential to cause problems elsewhere for MGM Mirage’s business. MGM Mirage announced last year that the New Jersey Division of Gaming Enforcement (DGE) had prepared a confidential report that says the casino company should distance itself from Pansy Ho, MGM Mirage’s joint venture partner in Macau. DGE called her “unsuitable” as a business partner. The report did not elaborate on why Ho was considered inappropriate. In 2005, the DGE reviewed MGM Mirage Macau joint venture with Ms Ho and submitted a report to the Gambling Commission, the report says that over the years there have been numerous public allegations suggesting that Stanley Ho, the father of MGM’s joint venture partner Pansy Ho, has connections to Asian organized crime. Stanley Ho has never faced charges and denied the allegations. MGM Mirage seeks an agreement with New Jersey in order to avoid a hearing with the New Jersey Casino Control Commission and a possible decision that the company is not suitable for doing business in New Jersey. Such a ruling would have an adverse effect and may launch an investigation into other states where MGM Mirage operates or reduce enthusiasm for a possible floatation. MGM Mirage spokesman Alan Feldman said the company disagreed with the report that calls Mrs. Ho an unsuitable partner.

Regulators in Nevada have approved the partnership between MGM Mirage and Macau after a review of two years. They found that the cooperation poses no threat to MGM or the state of Nevada. Two other states, Illinois and Michigan have not done reviews. MGM Mirage said she talked with Mississippi on cooperation with Macao, but they have done no further investigation. The decision by MGM Mirage to leave Atlantic City is one indication of how the casino gambling market has shifted to Asia. Gambling revenues in Atlantic City are at their lowest point in more than a decade, while Macau revenue is growing faster than ever. Macau has now surpassed Las Vegas in gambling revenues, they showed a growth of 48% over the previous year in December. The joint venture still has the smallest share of the six licensed operators in Macau, but MGM Mirage believes that is about to grow. In the past, Ms Ho said that she works independent from her father. Yet among others, she is managing director of Hong Kong stock exchange-listed Shun Tak Holdings Ltd, which her father founded and has been working as executive chairman. Ms Ho is also a member of the board of the holding company through which Stanly Ho operates SJM Holdings Ltd. She received her license from her father’s SJM, in 2004 she got the casino gambling license for the joint venture with MGM.

MGM Mirage owns half of the Borgata Hotel in Atlantic City, along with business partner Boyd Gaming Corp., which operates the location. When it opened its doors in 2003 it had an original price tag of 1.1 billion U.S. dollars. Boyd and MGM Mirage have since invested an additional 600 million U.S. dollars. Potential buyers have so far shown little interest in the asking price which MGM Mirage asked for her half of the casino betting company.