Atlantic City Concerned With MGM Macau Ties
Earlier this month MGM Mirage (MGM: 10.22 +6.79%) announced that executive Gary Jacobs had resigned from his position, recent reports say that the separation stems from Atlantic City regulators concerns about Jacobs handling of the business partnership in Macau.
With MGM holding 50% of the Borgata Resort, New Jersey gaming officials have spent several years investigating the joint venture between MGM and the Ho family and recommended that ties be broken in order to continue to hold the New Jersey license.
The investigation finalized in May resulted in regulators noting that Jacobs structuring of the Macau deal did not provide forthcoming information to regulators about the deal and how it was vetted by the gaming company.
New Jersey regulators continue to be concerned with how the gaming company got their standing in Macau back in 2004.
In 2007, Nevada gaming regulators approved the partnership with Pansy Ho, the daughter of Stanley Ho, who has held a monopoly of gambling in the Chinese enclave and has been a point of controversy revolving around organized crime.
The partnership with Pansy Ho, was MGM’s alternative to avoid being shut out of the booming growth in the area and involves payments to her father’s casino company in the form of a secondary license or “sub-concession” to conduct business there.
Nevada’s Gaming Control Board and Gaming Commission concluded that Pansy Ho, a capable business executive in her own right, was a suitable business partner for MGM Mirage and that the company had structured the joint venture to avoid influence from her father.
However the Casino Control Commission in New Jersey is expected to hold a hearing this spring to reopen the 2005 licensing investigation of the Borgata and address the suitability of MGM as part owner of an Atlantic City property.
New Jersey regulators could require MGM to sell its interest in Borgata, co owned with Boyd Gaming.
Reports say that sources familiar with the Macau deal feel that the departure of Jacobs, might pave the way for a more favorable outcome in a regulatory hearing
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