Tuesday, April 19, 2005 | 10:50 a.m.
MGM Mirage said today the government of Macau has granted a subconcession to a joint venture with business partner Pansy Ho Chiu-king to build a $975 million casino resort in the Chinese province, which is poised to overtake the Las Vegas Strip in gambling revenue. The company also expects to build up to three casinos with Ho.
MGM Mirage would operate the MGM Grand Macau under terms of an agreement with Ho, the daughter of Macau gambling boss Stanley Ho. The partners would each own half of the resort and have a hand in operations.
The deal is subject to regulatory approval by Nevada gaming authorities. It has raised eyebrows in the investment community because of Stanley Ho's business dealings in Macau, where gang warfare and loan sharking were once rampant.
Stanley Ho is one of three concession holders in Macau and had a monopoly on the region's casinos for several decades. The Macau government in 2002 broke his monopoly by granting concessions to Steve Wynn's Wynn Resorts Ltd. and Sheldon Adelson's Las Vegas Sands Corp.
MGM Grand Macau will be built in the waterfront city next to Wynn Resorts Ltd.'s planned resort. It will feature 600 rooms, a casino with 300 table games and 1,000 slot machines as well as several restaurants and entertainment amenities. It also will have 50,000 square feet available for future expansion.
Construction is expected to begin by the end of June for a planned opening in 2007.
MGM Mirage officials today praised Ho's "unparalleled experience" in the Macau, China and Hong Kong gambling market.
"The combined experience of these two partners brings a dynamic energy to this project which we anticipate will become the leading property in Macau," MGM Mirage Chief Executive Terry Lanni said.
President and Chief Financial Officer Jim Murren said the company has been working closely with Nevada regulators and other regulatory jurisdictions.
"We've done everything a responsible licensee can do and we have a high regard for our partner," he said.
The company acquired the subconcession from Stanley Ho's casino company but doesn't have a business relationship with him, Murren said.
In a note to investors Monday, Banc of America Securities stock analyst J. Cogan said analysts have been hesitant to give the company credit for its deal in Macau because of lingering concerns about how Nevada and other gaming regulators would view the company's association with Stanley Ho and his daughter.
While gaming regulators in Mississippi already have approved MGM Mirage's dealings with Ho, the Nevada Gaming Control Board is still investigating her dealings and the matter has yet to be brought to New Jersey's gaming regulatory boards.
State Gaming Control Board member Bobby Siller said today that the board's investigative staff has been working on the Ho case for nearly nine months and that completion of the work is "close."
Siller said investigators have been working with regulators in Macau, but "you don't just walk in there and start reading."
There are cultural differences between the United States and the Far East and government transcripts can be in Chinese or Portuguese, he said.
He wouldn't estimate a date for completion, saying that investigators won't be rushed and the length of a probe depends upon the complexity of the individual.
"Some may take three weeks, some are going to be longer," Siller said. "Steve Wynn's licensing took 10 months or so, and he had already been licensed."
Siller said Ho is a director on several of her father's companies and each of those companies must be checked out.
Investigators also will investigate business probity, the character of the subject and her past associations. They'll also look at the individuals who have control over business operations and all aspects of each company's revenue stream.
"MGM must have control of the casino to operate in an environment that would not bring discredit to Nevada," Siller said. "All areas of the revenue stream are being investigated. Where is the money going? Is it going to people we're not comfortable with?"
When the investigative report is issued, the three-member Control Board will consider it in a public meeting. The Control Board's recommendation would then go to the five-member Nevada Gaming Commission for final approval.
Siller said approving agreements for equipment manufacturers was easier, since there was no agreement other than casinos in Macau acquiring slot machines from local operations. After International Game Technology and Bally Gaming won approvals, Las Vegas Sands and Wynn were authorized after receiving agreements straight from the government of Macau.
"We've been wrestling with this (Nevada companies seeking to do business in Macau) for 2 1/2 years now," Siller said. "This type of deal is new ground for us, but MGM (Mirage) is meeting the challenge. It's not an adversary situation."
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