Last week, the New Jersey Casino Control Commission (NJCCC) granted its approval of MGM’s Statement of Compliance, a precursor to the company’s bid to re-enter Atlantic City’s gambling market. In a formal meeting last Wednesday, the members of the NJCCC reviewed the documents submitted and heard the testimonies related to the investigation of the suitability issues, supporting MGM’s petition for Statement of Compliance.
The approval of the statement allows MGM to re-claim its 50 percent Borgata ownership, which was placed under a trust agreement after the then MGM management decided to exit Atlantic City in 2010, rather than cut ties with Macau business partner, Pansy Ho. As Borgata’s casino license was up for renewal at that time, the New Jersey Division of Gaming Enforcement (NJDGE) had recommended for the NJCCC to consider Pansy Ho’s father, billionaire business tycoon Stanley Ho an unsuitable person to do business in the state, in view of his alleged connections with organized crime.
The NJDGE likewise deemed Pansy Ho as unsuitable because her direct financial, professional, and personal relationship with her father made MGM vulnerable to Stanley Ho’s possible influence and control. However, rather than pursue its NJ license by severing ties with Pansy Ho, MGM decided to make an exit by entering into a Stipulation and Trust Agreement with the Marina District Development Company, LLC (MDDC).
Under the agreement, MGM placed its Borgata ownership in trust under the supervision and control of a former NJ Chief Justice Judge, with intentions to sell its 50 percent interest within 30 months from the signing of the trust agreement.
As the turn of events has it, MGM never came around to selling its Borgata interest and has now successfully secured the NJCCC’s approval for the dissolution of the trust. The Commission, led by NJCCC Chairman Matthew Levinson, granted approval based on the merits of the compliance documents and on the results of the NJDGE report and testimony, which demonstrated the following:
- Two key corporate executives who represented MGM in its initial activities in Macau are no longer connected with the casino company. Moreover, the casino company has agreed to settle the $225,000 fine imposed by NJ gaming regulators for violating the state’s Casino Control Act in connection with a former MGM board member Terry Christensen. Despite Christensen’s criminal indictment in 2006, MGM still allowed his active participation as an MGM board member.
- Although Pansy Ho is still an MGM business partner, the NJDGE reported that it has reason to believe that Pansy Ho runs and manages businesses by making her own decisions and that Ms. Ho’s ownership in MGM Macau has been reduced from a previous 50 percent to 27 percent. MGM Resorts, on the other hand, had increased its holdings to 51 percent, a condition that gives MGM complete control over its Macau operations.
- The NJCCC found MGM’s present executive leaders as more responsive to regulatory requirements by putting in place stronger control measures for protecting the interest not only of its company, but that of New Jersey’s as well.
When the NJCCC asked MGM Chief Executive Officer James Murren about his plans, the MGM CEO candidly stated that he does not have any answers yet, but they intend to carry out their initiatives aggressively, since they are very aware of the problems that beset Atlantic City.