MGM Mirage Still Under Strutiny With Macau Casino Deal

Written on December 28, 2007 by admin

The efforts by MGM Mirage to open a casino halfway around the world have led to a review of whether there’s a conflict of interest within the New Jersey Division of Gaming Enforcement.

For nearly three years, the division has been conducting an investigation into MGM’s partner in the Chinese enclave of Macau. The partner, Pansy Ho, is the daughter of gambling magnate Stanley Ho, who for decades has been suspected of having connections to the Chinese mob.

The division’s long-awaited report — which could force MGM to choose between its holdings in Macau and Atlantic City, where it co-owns the successful Borgata casino — has not yet been completed. But the company and Pansy Ho recently opened the $1.25 billion MGM Grand Macau on Dec. 18, and MGM in November announced plans for a $5 billion casino resort complex next to the Borgata.

Now, the division has come under scrutiny because four of its investigators have been freelancing for a South Jersey casino consulting firm, Spectrum Gaming, which conducted its own investigation of the Hos and wrote a report detailing allegations of links between Stanley Ho and Chinese “triads” and raising questions about Pansy Ho’s independence from her father.

After MGM officials privately raised concerns about the freelance work of the division investigators — which was made public after a Las Vegas weekly newspaper, “Gaming Today,” wrote a story quoting unnamed company sources — New Jersey Attorney General Anne Milgram put a halt to the practice and started a review of their work.

All four of the division investigators received written approval from their division director before accepting work from Spectrum, as required by state rules, said Peter Aseltine, spokesman for the attorney general. And the founder of Spectrum, Fred Gushin, a former assistant division director and former New Jersey assistant attorney general, said none of their work for his firm overlapped with their duties at the division, including the Macau investigation.

Still, Aseltine said Milgram wants to be certain their jobs at Spectrum did not come into conflict with their jobs at the state. One has freelanced for Spectrum since 1998, two since 2005, and the fourth started earlier this year, Aseltine said.

“The attorney general is committed to ending this type of outside employment involving the Division of Gaming Enforcement,” Aseltine said. “She intends to prohibit regulators from working for private companies that have anything to do with gambling.”

MGM spokesman Alan Feldman refused to comment on the matter, other than to say the company continues to cooperate with the division on its investigation.

Spectrum does a wide range of casino regulatory work throughout the world, from assisting Native American tribes in the opening of their casinos, to helping government agencies draft casino regulations, to conducting background investigations and economic and feasibility studies.

In 2003, Spectrum was hired by an MGM rival, Venetian owner Las Vegas Sands, to investigate the Hos. Two years later, the Singapore government hired Spectrum to help it vet casino applicants. Gushin said the work the division investigators did for his firm was disclosed to the Singapore government before it hired Spectrum, and officials there saw no conflict.

Ultimately, the Sands beat out MGM for casino ventures in Singapore and Macau, which has eclipsed Las Vegas as the gambling capital of the world and is on track to report $8 billion in casino revenue this year. MGM was only able to enter the lucrative Macau market after it partnered with Pansy Ho and paid her father — who once held the monopoly on gambling in Macau — $200 million for a gambling “subconcession.”

The voluminous report Spectrum wrote about Stanley and Pansy Ho made its way to journalists, regulators and government officials around the world. It ultimately landed on the Web site of a anti-gambling group called the Family Focus Coalition, which has launched a campaign to convince regulators in Nevada and New Jersey to deny Pansy Ho a casino license. Nevada approved the partnership last year.

Both Gushin and Sands spokesman Ron Reese said they had no idea how copies of Spectrum’s report were leaked. Gushin said he was “livid” when he discovered the report had been widely distributed.

Reese said the Sands did not hire Spectrum for opposition research. Rather, he said the company wanted to learn more about the Hos.

Stanley Ho’s empire accounts for two-thirds of Macau’s tax revenue through its holdings in hotels, real estate, a ferry route, its largest department store, a local airline, a racetrack and casinos. Pansy, the eldest of his 17 children, is his heir apparent.

“We’re in the midst of a $12 billion development in Macau,” Reese said. “Certainly, there’s been a lot of rumor and speculation about the Ho family and its business activities. … It was only prudent for us to get the lay of the land, especially if there were people who would have to be business partners with us in the mix.”