New Jersey might rule on Pansy Ho this week
MGM Resorts International – 51 percent owner of Macau casino operator MGM China Holdings Ltd – could find out on Wednesday whether it will be allowed to re-enter the Atlantic City, New Jersey casino market.
A 2009 report of the New Jersey Division of Gaming Enforcement required MGM Resorts – then known as MGM Mirage – to choose between its investment in Atlantic City, where it has a half share in The Borgata Hotel Casino and Spa, and its investment in Macau. That was because of what the body said was the “unsuitability” of businesswoman Pansy Ho Chiu King (pictured) as a 50:50 joint venture partner in the Macau operation.
The Macau gaming rights for the joint operation were purchased as a sub-concession from her father Stanley Ho Hung Sun’s company SJM Holdings Ltd in 2005 for US$200 million.
Before New Jersey reached any final findings in its investigation into Ms Ho’s suitability, MGM Resorts pulled out, putting its 50 percent Borgata ownership into a fund controlled by a trustee, who was supposed to sell the interest if MGM Resorts didn’t find buyers.
But MGM Resorts received an extension, and then a stay, on plans to sell its interest controlled by the fund. In the meantime, its joint venture with Ms Ho floated on the Hong Kong stock exchange in 2011, leaving MGM Resorts with a majority stake of 51 percent and Ms Ho with cash and a diluted holding.
In February 2013, MGM Resorts was formally given leave to apply to re-enter Atlantic City market. But it prompted state gaming regulators to reopen their “suitability” investigation concerning Ms Ho’s involvement in the Macau venture. The results of the fresh investigation are expected to be introduced as evidence in a hearing on Wednesday, a New Jersey Casino Control Commission spokesman told Reuters.
If MGM Resorts does return, it will be to a less crowded market, and one that has recently seen tough trading conditions, while MGM Resorts’ Macau operation has strengthened, with a second resort due for completion on Cotai in 2016. By contrast in November 2012 – hit by economic downturn, increased regional competition and the effects of Hurricane Sandy – Atlantic City suffered a near 30 percent fall year-on-year in gaming revenue – its worst result in 34 years of legalised gambling.
Privately-held Trump Entertainment Resorts Inc on Tuesday filed in the U.S. for Chapter 11 bankruptcy protection. There were also reports that Trump Taj Mahal, its remaining asset in Atlantic City (with Trump Plaza due to close next week), may also shut down as soon as November 13 with all operations ceasing by November 27.
Union Gaming Research LLC said in a note: “The move to file was not unexpected given recent admission by management which characterised a restructuring for Taj Mahal as imminent. This follows Trump Entertainment’s prior appeal to lenders to renegotiate certain debt covenant restrictions apparently aimed at avoiding default and possible foreclosure on the Taj Mahal property.”
Revel Atlantic City, controlled by Revel Entertainment Group LLC, and which only opened on April 2012 at a cost of US$2.4 billion, closed last week.
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