Mississippi panel to probe MGMs ties to The King
Investigators for the Mississippi Gaming Commission will pack their bags and fly to Macau in early January to see what they can learn about plans by U.S. gaming giant MGM Mirage to open a casino there in partnership with a daughter of billionaire gaming magnate Stanley Ho.
Commission investigators say they want to scrutinize MGMs agreement with Pansy Ho, who is managing director of Shun Tak Holdings Ltd., a Hong Kong conglomerate with interests in investment banking, shipping, real estate and hospitality. She is also a well-known businesswoman in Hong Kong and Macau.
We have some concerns, said Leigh Ann Wilkins, the commissions public affairs director. We want to make sure there ... are no financial ties between ... Pansy Ho and [her] father, Stanley Ho.
A corporate securities analyst will be among those making the trip. Alan Feldman, MGMs senior vice president for public affairs, called the process routine.
It is normal that their investigators will take a look at what companies are doing in various parts of the world and in the U.S., Feldman said. Im actually glad to hear they are getting that part of it underway.
Ho has long been rumored to be linked to organized crime figures but has never been prosecuted for any alleged criminal activity. He has denied such links.
Though MGM Mirage is headquartered in Las Vegas, it has licenses in multiple jurisdictions in the U.S. and internationally. Each jurisdiction regulates independently.
Mississippi investigators say they want to make their own determination of whether there are direct financial ties, or questionable activity, surrounding MGMs partner as they are required to do before approving any foreign partnership of a licensee under Mississippi gaming law.
We want to make sure that all ties are separate and there are no financial ties to [Stanley Ho], Wilkins said. Historically, he has had some questionable business relationships that we dont feel comfortable with. Technically, [such ties] could jeopardize the good standing of MGM licenses in Mississippi, if they were to move forward with business agreements.
Feldman said his companys agreements have been exclusively with Pansy Ho and her company and said MGM is not concerned about the investigation.
Things in Vegas were not always about four-diamond resorts, Feldman said of Macaus past. Things were different even here [Las Vegas], 50 or 60 years ago.
Nevada, generally regarded as one of the most stringent of gambling regulatory bodies in the U.S., does not require preapproval of foreign partnership agreements by license holders in their state.
Gambling Commission Chairman Dennis Neilander said state law was changed several years ago to require that licensees engaged in gaming in other jurisdictions file disclosures of partnerships, financial matters and any other information of likely interest to gaming enforcement authorities there.
Those reports are confidential, Neilander said.
So far, he said, reports have been filed only by Sheldon Adelsons Las Vegas Sands, which is currently operating a casino in Macau. Wynn Resorts and MGM Mirage, both of Las Vegas, expect to complete their projects in Macau in 2006. -- D.L.
The political and economic reformation
underway in Macau, in which U.S. gaming companies are challenging
Southeast Asias King of Casinos over control of a vast, growing
Asian gambling market, has drawn four of the worlds most colorful
and savvy billionaires to roll the dice in a play big enough to
At the heart of it
all are three of Americas richest men: Sheldon Adelson, 72, who
controls the Las Vegas Sands casino and resort empire; Kirk
Kerkorian, 87, the reclusive controlling investor in MGM Mirage,
the nations second-richest gaming company; and Steve Wynn, 62,
chief of Wynn Resorts, a visionary frequently credited with
reinventing the modern Las Vegas as an entertainment and luxury
They are invading
the once-exclusive territory of the mysterious Stanley Ho, who for
four decades has controlled gambling in Macau, built a massive
fortune in the process and monopolized the biggest gamblers in
The Americans -- at
the invitation of Macau, or more formally the Macau Special
Administrative Region (SAR) of the Peoples Republic of China, about
40 miles west of Hong Kong -- have exchanged gaming licenses for
their promise to invest billions of dollars in the island enclave,
which financial analysts say is poised to become the new world
capital of gambling just five years after its repatriation to China
after 400 years of Portuguese rule.
industry insiders predict that Macau will eclipse Las Vegas as
early as next year as the most profitable of gambling and tourism
centers, even before two of the U.S. gaming giants -- Wynn Resorts
and MGM Mirage -- open plush new Las Vegas-style casino-hotels
there in 2006.
Skeptics, who have
questioned the impending changes ever since Adelson, Wynn and
Kerkorians operations won licenses to operate in Macau, have
predicted that Asian gamblers might not be attracted to the
glittering, flashy, Las Vegas-style casinos.
But the results so
far for Adelsons $265 million Sands Macau Casino, the first to be
completed, is proving them wrong. The exotic and well-lighted place
took in more than $167 million in the third quarter, according to
company financial reports, nearly tripling its revenue for its
first quarter of operation that began last May.
Within the next
five years, some 20 new casinos and resort-hotel properties are
expected to mushroom on the small island, home to just under a
half-million people on land a tenth the size of metropolitan
An estimated 60,000
new hotel rooms are planned, along with hundreds of restaurants and
Vegas-type entertainment venues. Macaus new tax revenue stream --
the casino rate is 39% -- will help pay for enhanced transportation
facilities and other amenities to serve millions of Asian and
international visitors expected to greet the new era of gambling
and tourism there.
Macau enterprise, a subsidiary of his Las Vegas Sands Corp., along
with Hong Kong-based partner Galaxy Casino Co., has promised to
invest $8 billion in Macau over the next two decades, much of it in
conjunction with international hotel and resort
Adelson also plans
to open the companys second casino, the Macau Venetian Casino
Resort, a theme property similar to the Venetian in Las Vegas, by
June 2006. An initial public offering now being launched by his
company is expected to raise $536 million next year from new
stockholders for investments in expansion in both Las Vegas and
are also on tap in Macau, in hopes of attracting business
travelers, as are plans for airport expansion and infrastructure
developments, including new broad boulevards and bright lights
designed to transform the island of the past into the new Strip of
Beijing is doing
its part, as well, with guarantees to leave development decisions
in the hands of local officials in Macau for the next 50 years, a
strategy designed to encourage foreign capitalists to invest there.
It has also relaxed visa restrictions on currency regulations to
open the floodgates to mass marketing gambling to hundreds of
millions of Chinese residents who are members of an emerging middle
And that, it seems,
is just for openers.
Casino gambling is
likely to grow dramatically throughout Southeast Asia, in
Singapore, Taiwan, Thailand and, eventually, Japan and mainland
China, said Peter Collins, director of the Centre for the Study of
Gambling at the University of Salford in Manchester,
agree, has set the stage for U.S. gaming interests to not only
succeed but to help tame what was once the wild and wooly East -- a
place heavily influenced by crime lords -- just as major gambling
and entertainment companies in Las Vegas tamed what was once the
Wild West playground for organized crime in the U.S.
Macau is keen both
to become respectable and to become a major gambling tourism
destination in the region, said Collins, hence the decision to
bring in Wynn and Adelson as highly creative operators from a
rigorously regulated jurisdiction.
Adelson and his
U.S. compatriots have been confident in public that staking out new
territory in Macau, even under an untried government, has come with
little risk and almost no downside. But others note that the
ventures have been surrounded from Day 1 by the kind of intrigue
that once characterized Las Vegas itself before heavy regulatory
control arguably ended the reign of the American mafia
At the center of
that controversy is Americans chief adversary, the enigmatic and
controversial billionaire Stanley Ho, 87, who for more than 40
years enjoyed a monopoly on gambling in Macau under a single
license issued by Portuguese authorities. From the 1960s until
Portugal returned control of Macau to Mainland China in 1999, the
islands gaming district earned a reputation as an anything-goes,
vice-driven and crime-ridden environment.
Though Ho, who
sometimes refers to himself as the Casino King, has vehemently and
repeatedly denied any connection to organized crime, he has
flourished and grown rich amid the powerful triads -- Chinese gangs
that have operated loan sharking, money laundering and drug
trafficking in Macau for decades and are said to have influenced
gambling operations there through murder, kidnapping and other
business techniques of the underworld.
Raymond Butler, a
British citizen now living in the U.S. and a former managing
director of a major pharmaceutical company in Asia, said he and his
wife toured Macau in the mid-1990s and were enchanted by the
culture, churches, gardens and history of the island.
We took pains to
stay clear of the gambling district, he said. You didnt want to go
there, it just didnt feel safe, he said.
That image didnt
deter millions of gamblers over the years, who found Hos parlors
appealing largely because they were the only game in
But those gambling
dens were dim, seedy and run-down, an environment that Las Vegas
has exploited to its advantage in trying to lure Hos so-called
whales -- largely Asian multimillionaires who risk a small fortune
without blinking -- to the brighter lights and luxury treatment
that they hoped would cut into Hos market share.
It was also the
environment that Macau officials have sought to combat by ending
Hos monopoly and picking U.S. companies to remake Macaus gambling
district in their own image.
Despite Hos history
of operating in an unsavory environment, his power apparently
remains potent. He won a two-year reprieve on his gambling monopoly
in 2000, as the SAR sorted out its plans to convert Macau to a more
peaceable gambling and tourist destination. And during that time,
Macaus streets grew quieter. Hos own business model also was
affected as he began to remodel his own holdings to be more like
his new competitors.
The question now
is: Can Macau be transformed from the Las Vegas of the 50s to the
Las Vegas of 2000, said William Eadington, a professor of economics
and the director of the Institute for the Study of Gambling and
Commercial Gaming at the University of Nevada. There are reasons to
be skeptical, but if you have good internal controls and resolve
you are not going to let anyone get into trouble, then there is a
good chance it will work.
Hos monopoly ended
when Macau authorities granted three new licenses in 2002. Wynn
Resorts, Galaxy Casino Co. in combination with Adelsons Venetian
Macau, and Hos own Macau Gaming Co., a subsidiary of his Sociedade
de Turismo e Diverses de Macau, were successful bidders from among
some 20 competitors.
Since then, a drop
in crime already has created a sharp contrast to events of the mid-
to late- 1990s that unfolded as the Portuguese prepared to hand
over Macau to China. Warring factions of the triads, trying to hang
onto loan sharking and prostitution concessions, brought a wave of
violence to the citys streets, reminiscent of Chicagos gangland
wars of the 1920s.
Disney World it was
not, said Sebastian Sinclair, a U.S. gaming analyst with
Christiansen Capital Advisors. Triads were running rampant. But the
goal of the Chinese was on target: to get a company like the Sands
in there and, with the massive infusion of capital, to clean things
reports in nearby Hong Kongs South China Post, gangland attacks in
the enclave surged in that uncertain period, with nearly 100
assassinations on the streets, including those of a Portuguese
gaming regulator, several local law enforcement officials and local
What role Ho may
have played in helping to bring those gang wars under control
remains largely a matter of speculation. The Chinese government
itself, in a widespread crackdown linked to the troubles in Macau,
has jailed thousands of suspected triad members and their
associates since the turnover from Portugal.
And the Americans
have done their part, as well. Steve Wynn told Macau officials that
he would not begin construction of his hotel and casino project
there until there was a change in a long-standing rule in Macau
that prohibited casinos from granting credit to
The effect, said
company insiders, was that gamblers were driven to loan sharks for
cash. That single legislative change may well dry up much of the
illegal money changing that gamblers depended on in