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Bloomberg News file
Casino billionaire Stanley Ho and daughter Pansy Ho attend a groundbreaking ceremony for an MGM Mirage casino in 2005 in Macau.
Tuesday, Dec. 29, 2009 | 2 a.m.
Sun Archives
- MGM Mirage executive Gary N. Jacobs resigns (12-18-2009)
- Las Vegas Sands moves forward with Macau project (11-11-2009)
- N.J.: MGM Mirage should ‘disengage’ from Macau partner (5-19-09)
- MGM Mirage, Boyd gaming license investigation reopened (7-31-09)
- Ho, MGM Mirage deal should pass regulators (7-19-05)
- MGM Mirage talks continue in Macau (2-10-04)
Sun Coverage
This month’s abrupt departure of MGM Mirage executive Gary Jacobs stems from East Coast regulators’ concerns about Jacobs’ handling of the company’s business partnership in the Chinese enclave of Macau, knowledgeable sources say.
Because MGM Mirage has a half-interest in the Borgata resort in Atlantic City, New Jersey gaming enforcement spent several years investigating a joint venture the corporation set up in Macau — and wound up recommending that MGM break ties with its Macau business partner.
During that investigation, which wrapped up in May, regulators noted that Jacobs — who structured the Macau deal as MGM Mirage’s general counsel and served as the company’s point-man in Macau — was not forthcoming with information for regulators about the deal and how it was vetted by the company, according to sources with direct knowledge of the investigation.
Jacobs, who worked at MGM Mirage for nearly a decade, could not be reached for comment.
MGM Mirage’s interest in Macau — a booming casino market fraught with controversy — has opened the company to the kind of scrutiny that casino operators haven’t seen for decades.
Macau, the only part of China where casino gambling is legal, is the world’s most lucrative gambling destination, eclipsing Nevada’s gambling revenue.
MGM Mirage is planning an expansion in Macau and an initial public offering of stock to capitalize on Chinese demand for gambling-based resorts.
The company’s problems in New Jersey, however, go back to the way it got its foot in the door in China in 2004 — through a partnership with Pansy Ho to develop the $1.3 billion MGM Grand Macau, a 600-room luxury resort. Ho is the daughter of Stanley Ho, who held a decades-long monopoly on the casino business until 2001, when the Macau government — in an effort to not only fuel non-gambling, mass-market tourism through the construction of Las Vegas-style megaresorts, but also rinse the taint of organized crime from Macau’s casinos — invited foreign companies to bid on licenses to build competing properties in Macau.
Las Vegas competitors Wynn Resorts and Las Vegas Sands — which now generate most of their earnings from Macau — won two of the three initial licenses to build casinos there.
The third license remained with Stanley Ho’s casino company.
MGM Mirage, not wanting to be shut out of a lucrative market with long-term growth potential, found another route into Macau.
Knowing that U.S. regulators would not approve of a Nevada casino company doing business directly with Stanley Ho, MGM Mirage formed a joint venture with his daughter, Pansy Ho, that involved a payment to her father’s casino company, in the form of a secondary license or “subconcession,” to do business there.
Though never convicted of a crime, Stanley Ho has reputed links to Chinese organized crime.
Stanley Ho’s contention that he isn’t tied to criminal activity doesn’t hold much weight with U.S. regulators, who believe his renting of gambling rooms to third parties allows casinos to turn a blind eye to shady practices kept at arm’s length.
Whether the influx of American casino operators has cleaned up these rooms in recent years isn’t clear, as Nevada regulators have limited authority to regulate how business is done in Macau.
But as recently as 2007, Macau regulators noted that gang-linked VIP rooms — where Macau casinos generate the vast majority of their business — are an ingrained problem.
Nevada gaming regulators approved the Macau partnership in 2007 — two years after MGM Mirage had begun to develop MGM Grand Macau and nine months before the resort was scheduled to open for business. Though uncomfortable with Stanley Ho’s reputation and armed with volumes about his alleged misdeeds, 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.
While much of Pansy Ho’s initial investment of $80 million in the MGM deal came from her father, she insisted to Nevada regulators that her father didn’t influence her business operations. And regulators noted that negative publicity about her father wasn’t sufficient enough to prove that Nevada’s reputation would be harmed as a result of the deal.
In the early days of casino regulation in Nevada, regulators approved people with ties to organized crime because of the relative lack of industry expertise among the general population. Some of their sons, daughters and grandchildren have since obtained casino licenses here and have proved themselves to be upstanding citizens.
New Jersey, however, has taken a harder stand on mob influence over the years, forcing several executives with checkered pasts to resign their posts with companies operating Atlantic City casinos. Some of those executives were licensed in Nevada at the time.
In some cases, companies have sold their casinos in Atlantic City rather than sacrifice executives or subject their companies to further scrutiny.
“New Jersey has decided that children can be faulted for the sins of their fathers” and that people can be guilty by association, said I. Nelson Rose, a California-based gaming attorney who has testified in gaming licensing hearings. Nevada, on the other hand, has taken a live-and-let-live approach by not prying as deeply into the backgrounds of some operators’ relatives and past associates.
“The question is where you draw the line,” Rose said. “That’s what regulators are supposed to do.”
In MGM Mirage’s case, regulators with New Jersey’s Division of Gaming Enforcement in 2005 red-flagged the company’s partnership with Ho in a report to the Casino Control Commission — the agency that makes the final determination on licenses or other regulatory matters. In Nevada, casino licenses don’t have to be renewed and can only be revoked as a result of some significant infraction. In New Jersey, Atlantic City casinos must renew their licenses every five years, which allows regulators more leeway to investigate concerns and cite casinos for problems that come up in the course of business.
The 2005 report by the Division of Gaming Enforcement was part of a routine licensing renewal for the Borgata, which MGM Mirage owns with Boyd Gaming Corp. In the report, the New Jersey regulators said they were continuing to investigate the suitability of the Ho deal. They completed that investigation in May and notified MGM Mirage.
In a filing with the Securities and Exchange Commission that month, MGM Mirage disclosed New Jersey’s recommendation that the company break ties with Ho, the investigators’ findings that Ho is “unsuitable” as a business partner, and that MGM Mirage’s due diligence and compliance efforts were found to be “deficient.”
New Jersey’s Gaming Enforcement Division made these nonbinding recommendations to the Casino Control Commission, which is expected to hold a hearing this spring that effectively reopens the 2005 licensing investigation of the Borgata and addresses the suitability of MGM Mirage as a part owner of an Atlantic City property.
Whether New Jersey regulators would ultimately force MGM Mirage to sell its interest in Borgata or forfeit its deal in Macau remains to be seen, as the Macau investigation is the first of its kind involving a foreign business partner.
The departure of Jacobs, which was announced in a required SEC filing without any of the flattering comments typically made by companies whose executives retire, might pave the way for a more favorable outcome in a regulatory hearing, according to sources familiar with the Macau deal, who declined to be identified.
Dan Heneghan, spokesman for New Jersey’s Casino Control Commission, declined to comment on whether Jacobs is discussed in the regulators’ report because it remains confidential until the hearing.
MGM Mirage spokesman Alan Feldman said the company would not comment on why Jacobs resigned. Jacobs, 64, had a job contract through Aug. 3, 2013, according to SEC filings. His resignation agreement calls for him to be paid $3 million over 2 1/2 years.
Nevada Gaming Control Board member Randall Sayre said New Jersey regulators are entitled to their judgment on the Macau deal, but added that Jacobs was “a licensee in good standing” with Nevada regulators during his tenure at MGM Mirage.
“There’s nothing in the system in Nevada at the time of his resignation that was a regulatory concern to this agency,” Sayre said.
Even so, MGM Mirage should expect a difficult hearing in New Jersey, given that regulators — who have recommended against the Macau deal — put the burden of proof on casino operators to prove that their business dealings are above reproach, Rose said.
“To some extent they have to prove a negative — that Stanley Ho doesn’t have connections to organized crime — and that’s going to be tough.”
Alright ! the Mob is back!! MGM has really done it now ! If they are in bed with the chinese Mob this writer can't get up off the floor from laughing so hard!!!!
Ah, so that's why Station Casinos' Fertittas bros can mingle with mob influence in Las Vegas' strip joints...
http://www.americanmafia.com/Inside_Vega...
Anybody who believes the Mob is gone from Las Vegas and its hospitality industry are living in a dream land.Truely the Mob built Las Vegas and they will never let go.Their scale of involvement is not known but I believe they are still strong here.They got caught and exposed but they never left.They just have taken a different approach in their involvement.Why would the Mob completly leave Vegas they have to much stake in Vegas.I do not agree with their tactics but I do agree with their marketing concept.They built a great place to come and visit and gave a great deal for the dollar spent.
Who cares if the Mob still has ties here in Vegas.If they were still here full throttle this town would not be suffering from the recession as it is now.Maybe they need to come back and teach the goofballs who messed things up how to treat a guest and teach them how to give value for the dollar spent.
Of course this will not happen because the government might lose their cut.What is worse the Feds taking their cut and wasting it on garbage projects that doesnt benifit the state of Nevada or The Mob taking their cut and getting thier investment back and turning it back into Las Vegas and Nevada and giving back to the Place that made the the money to begin with.Come on lets get real
I hope Las Vegas survives this economic turn down and the town flourishes but there must be changes in customer service in this town.
rodtig :
Well done !
I am happy that the mob has an influence. They always ran it better than these corporate college execs with their computers and spreadsheets! Someways of running a gaming operation is instinct and experience and not having corporate telling u how and when to do things at every turn .Gaughan is an example of being not being allowed to make decisions while at Boyd so he bought out his stake and we have Southpoint which is a little better than the Coast Operation!
Wish this story could be more clear about what its point is.
"The Mob taking their cut and getting thier investment back and turning it back into Las Vegas and Nevada and giving back to the Place that made the the money to begin with."
rodtig - When was the last time the Mob built a school? or road? or hospital? Do you think the money skimmed from the casinos by the Mob went back to the local community? You're crazy, it went back to St. Louis, New York, & Chicago. The only money that stayed with the local enforcers went to gambling, booze, & hookers.
Freakin' hilarious! ha!
S711
The name Randall Sayre says it all. He is as corrupt as they come.If MGM MIRAGE told him to go to the damn and jump he would.
modd Have you lost your comprehension skills? An eighth grader could follow the point of this article.
homer obviously only gets his news from the rj. anybody who knows Randall Sayre knows he is one of the straightest regulatory shooters in the biz.
as far as the mob is concerned, it's called Corporate now. And sinatra711, in the past, the mob took care of their biz AND the city, while Corporate doesn't look beyond the walls of their casino.
casinoguy888 - Name 5 mob contributions to the community in Vegas? Would love to know what legacy they have left behind. They ran the casinos here for decades, there should be remnants of their charitable work somewhere. Wait, does the Union count? LOL
S711
I highly doubt MGM wants to do anything in NJ anyway. What they do like; however, is there investment in Borgata. Boyd Gaming built and operates the place and MGM gets cash distributions through its ownership stake without lifting a finger. It is like a cash machine for them. This should be interesting.
Here are some new thoughts for Nevada Gaming Regulators. If there are problems or complaints GAINING ACCESS to the lucrative Macau market for big corporations licensed and operating in Nevada, what about licensed Nevada operators STAYING THERE, for decades?
Gaming and hospitality accommodation involve much more than reliable verification of countable daily transactions such as table-slot drop and hard-soft count by regulators. Just as important are relationships, behaviors, behavior norms, and behavior expectations to maximize profit and "always get the money" accommodating VIPS who keep the cash flowing and other business partners in the perimeter of the countable transactions.
When there comes a time that more money is pouring into Nevada company retained earnings from far away places with long histories and norms such as Macau, than from Nevada, with both destinations even sharing some of the same special customers, how much less leverage will gaming authorities have over mega corporations with a homebase in Nevada (?).
In recent years operators from Miami such as Prive have come under penalties for underagers, open solicitation and a drug scene. However, have not shadowy adult Asian VIPS likewise received special accommodation in other places inside the Strip Corridor, including mega nightclubs with operators who also made their name in South Florida (?)
Regarding this article, it is probably a correct assessment that "negative publicity about Stanley Ho was not sufficient enough to prove that Nevada's reputation would be harmed as a result of the deal". Which begs the question, "what Nevada reputation?". Pansy Ho received the money to invest from Stanley Ho, her Father. Nobody in Nevada was going to say no to Terrence Lanni and MGMM.
MGMM is Nevada's largest employer and taxpayer, and they were very surprised to bid strong and not be chosen. They immediately went to Plan B, which rapidly took them through the alphabet all the way through to the letter P. MGMM was expanding and making as much money as possible in the shortest amount of time, something which ebbed into the corporate mission statement, never mind the long term negs for labor, shareholders and Southern Nevada.
Which gets back to mentality, culture and behaviors to compete and win in a far away place such as Macau with it's own history and norms for so long, and reliable verification back home in Nevada. This article states, "Nevada regulators have limited authority to regulate how business is done in Macau". In such a lucrative market, is it foreseeable that an executive(s) and/or operator(s) can find themselves under duress and compromised to meet the behaviorial expectations of the company.
Rambling, but food for thought.
Forget New Jersey.... the Money has never been there. The new money is in Macau. MGM/Mirage is a great company and very well run with Jim M. in charge.
The NJ Gaming Commission is a joke and over reaches its authority. They try to bring ties in that don't exist. How can they say, "you are a murderer cause your father was?" ....that makes absolutely zero sense. I say file a multi-billion dollar lawsuit against the State of New Jersey....they are broke and would have to settle or raise taxes even more to fight it. After all NJ is the highest state taxation rates already. Wow, they really run that well too.
Patrick
New jersey just being difficult as they are more than likely not going to have thier hand in that pot of gold called Macau...They are getting HO'd out on this one.....
Sinatra711 :
You youngster! if you knew anything about the history of Las Vegas, you would know that the mob contributed heavily to all of the local charities, built Sunrise Hospital, backed City Of Hope, Jimmy fund, built schools for handicapped children,.. on and on.. Once again your age shows...
Sinatra711 Here is one Big contribution besides environprotector list The City of Las vegas would not even exist if it were not for the mob.
When the Mob kept building casinos and creating more jobs where did the money come from.There was taxes piad to to community they just skimmed some.Where do you think the money came from to build schools fire depts. police depts.roads houses and so fourth,The Mob, Sinatra711.
They paid employees who paid taxes which built this town.Hello!!!! Heck I have only lived in Vegas just short of a year and had never been here before I moved here Sinatra711 and I can figure that out.
When the Mob was here in full force they owned the casino's pretty much debt free now they are owned with junk bonds and in debt to their eyeballs and they can't pay their own bills much less make noticable contributions to this town and are destroying what was built here a secure sound industry that was recession proof because of their whitty marketing and ability to only build what they could pay for.
Ithink New Jersey regulators are smart in the way of looking at who MGMM is in bed with in Maccau.What I see them doing is throwing out a red flag that we need to not be in Maccau and really try to keep the visitors here in Las Vegas and Atlantic City.I see the tide changing and Las Vegas being second rate to Maccau.
If Stanley Ho has Chinesse Mob ties and he gave money to his daughter Pansy Ho do not tell me he has no influence on his daughter and influence with MGMM Please!!! Just like the mob here they looped their money through others who appeared to be legit and had full control of the opperations of the casinos.
Nevada needs to follow suit or we will find that Stanley Ho will secretly controll casinos in Vegas He might already does for all we know but I imagine that the American Mobsters do not allow that.
I wish the American Mob could teach these corperate goofballs here in Vegas how to market Las Vegas.Believe it or not I have read that the streets of Las vegas were actually safe here when the Mob controlled Vegas.Imagine that.I see why because the Mob cared about its guest and would not tollerate crime against their patrons and people Knew that if they committed a crime agaisnt a Casino guest they would be handled apporprieatly
environprotector/rodtig - You guys are hilarious! So in love with what you perceive to be reality, it's funny. The casinos would have paid taxes without the mob, just like they are now.....so the schools and everything else would have been built anyway. The money they skimmed was tax free, so guess what? That's taxes for the community that left the State! If you want to live in a mob controlled environment, why don't you move to New York or Sicily? Because it's not so great is it?
Thought so....ha! :)
S711
In essence then "Wynn Resorts -- which now generate most of their earnings from Macau --" is dirty, filthy mob money which Steve Wynn then launders and feeds to Harry Gried.
Isn't that in essence what is being said here: Chinese mob money is going to buy the influence of Nevada's most prominent Senator?
What about the Dubai money that Gried is getting? Isn't that just as equally filthy money?
Even with all the glitzy towers, darkened windows, and LED lights, Las Bugsy remains Las Bugsy. The only difference now is that the mob money is coming in from international sources instead of NYNY and Chicago.
According to numerous news sources, Stanley Ho will not be around much longer anyway (even though he was just brought home from the hospital). If he passes away, will this be a mute issue?
American_Gaming_Guru - No, it won't be a moot issue because New Jersey doesn't care if the person is dead or alive. They don't like associations with criminals, past or present. New Jersey is one of the toughest jurisdictions in the world when it comes to this stuff.
S711
Jersey shake down artists who's going to investigate those bums?
Sinatra711
If you can posibly understand what we are saying is Las Vegas would never came to where it is one of the largest tourist destination in the world and the mob built Vegas that is the point and the crime on the streets here was low when they were present.They did not tolerate crime against their guest now the corperate goofballs could careless.
Sinatra you obviously have no clue about mobsters go to americanmafia.com it might give you some insight.
When the mob was here where did the money come from to build more casinos and create jobs which created other buisness which creatwd tax dollars If it were nit for the mob Vegas would be a ghost town
rodtig - Could it be that crime was low in Las Vegas because there was 125,000 people living in Las Vegas in 1970? Lower population = less crime......bigger city = higher crime. Did the mob try to keep crime off the streets? Sure, but it was only because they wanted to protect their investment.....in the meantime, they were killing people or assaulting people who they thought were snitches or crossed them.....are you ok with that? You're logic is hilarious.......go watch the Godfather or Goodfellas and yearn for the Hollywood Mafia life......you totally discount the lives the Mob has literally taken. You don't see corporations murdering and intimidating people.....they are laying people off....big deal, they can go find another job....at least they are alive.
Any more logic I can enjoy laughing at?
S711
Once again Sinatra711 it is obvious that you can not see that What made Vegas The premier gambling destination of the world and yes in my very first comment I stated I did not agree with all their tatics.
The main points that were being made by myself and environprotector was that the casinos were better marketed and were completely operated with customer service in mind.Gambling was the main income to the czxinox in that day and all the shows hotel rooms and food was used to keep the guest happy and keep you at the tables and slot machines.
The new Vegas is earning points and if your lucky you might get a comp.
When the casinos opened on the Gulf Coast and Tunica Ms. they were focused on customer servive and making sure you returned to their establishment.
layers cards were available and if you were gambling but you were still able to get a comp without one.
The gamming establishments here you have to play alot and if your playing at a table game your lucky to get credit for the amount of money you play win or lose.
I broke in one day at a Black Jack table 25.00 a hand min. Played fro approximately 5 to 6 hours.My buy in was 500.00 and I walked out with a considerably larger amount in winnings.When I colered up my winnings and left the table the pit boss saw and I asked him if I could get a comp.Let me check he said came back and I did not have enough points to get a food comp.I was blown away I just wanted to eat and return to gamble some more I ticked me off so I left and never returned.I hit them for a large sum of money and they did not want to do anything to keep me their.No wonder these casinos are hurting.Their system doesn't keep the gambler gambling the mob shooot want a room want dinner want show tickets and the gambler stayed in their casino and gambled more
Sinatra711 you must be one of those pin pushers with no common since just like the corperate execs who run the casinos today.
And as far as the Mob in Marketing they had it going on all the way up to the mid 1980's and yes they were tough on cheats and scmmers during those days but so was the local police dept.Ask any old school dealer there is a few still around and ask them how they feel about the 70'sand 80' to the 2000's and they will tell you the corps screwed it all up
rodtig - You do not know enough about the casino business to fully understand how this all works. Of course the dealers will tell you that they liked it better back then......they were making huge amounts of money.....but that wasn't because of the mob, it was because Table Games were the main driver of casino revenue. That all changed in the early to mid 90's when slots became dominant. The reason isn't mob related, it is a change in society. Table games no longer drives the revenues/profits it once did, therefore dealers make less.....no surprise there.
Regarding your comp request......your theo win for approx 5-6 hrs of play assuming 1.5% house advantage, $25 avg bet, and 75 hands dealt per hour is between $140 and $168.....with a 10% to 20% reinvestment that would yield you a comp of somewhere between $14 and $33.....depending on where you asked to be comped to, you didn't earn enough to deserve a comp. Simple math.......if you don't understand what I'm talking about, then we can stop right now.
Back then, the mob was able to comp whomever they wanted to because they were making so much money that it didn't matter. In today's world, there is too much competition and everyone has a player's club and rewarding customers with comps and cash back. Customers appreciated a comp back then, now they expect it. When I broke into the business in '95 people still appreciated a comp, no matter what the amount.....now, all I get are people demanding more and more than they deserve.......we can't satisfy everyone, mob or not.
S711
Is Pansy Ho single??