Pansy Ho fails N.J. suitability test...and more Asia/Pacific news



Pansy Ho fails N.J. suitability test

New Jersey gaming regulators have told MGM Mirage it needs to “disengage itself from any business association” with Stanley Ho’s daughter Pansy Ho, who owns 50 percent of MGM Grand Macau.

In a filing with the Securities and Exchange Commission, MGM Mirage said the state’s Division of Gaming Enforcement issued a confidential report to the New Jersey Casino Control Commission recommending that Ho, a Hong Kong businesswoman, be found unsuitable as a business partner. The division asked the commission to set a hearing date.

Depending on how far it goes, MGM Mirage could be forced either to sell its 50 percent interest in Borgata, the Atlantic City casino it co-owns with Boyd Gaming, or sell its 50 percent share of MGM Grand Macau.

In its SEC filing, the company said it didn’t believe the report would affect its operations.

“MGM Mirage has fully cooperated with the [division] in its investigation,” a spokesman told the Las Vegas Review-Journal. “While we disagree with the recommendation of the [division], we look forward to presenting our position at the hearing.”

Dennis Neilander, chairman of the Nevada Gaming Control Board, noted that Nevada and New Jersey have different laws governing suitability, although he said he hadn’t at that point seen the report. “If there was evidence not provided to us, then there would be a concern,” he said.

New Jersey gaming authorities opened an investigation in June 2005 on the suitability of Pansy Ho, whose father has been alleged by international law enforcement authorities to have ties with Chinese organized crime gangs, known as triads.

Stanley Ho had a monopoly on gambling in Macau until the central government in Beijing opened the market to competition at the start of the decade. He is still the peninsula’s largest casino operator with 18 properties.

LVS TAKES OUT THE AX: 4,000 JOBS ON THE BLOCK

Las Vegas Sands plans to cut as many as 4,000 more jobs in Macau and Hong Kong as it works to control costs following the halting of construction on its US$12 billion Cotai Strip development.

Between 3,000 and 4,000 jobs will be eliminated by September on top of a previously announced 2,500, according to Michael Leven, the company’s new COO. The company “expects to do better” than the $470 million in cost cuts it has targeted, he said, adding that about 90 percent of the savings may be permanent.

“We’re managing to the levels of business that we have, as opposed to the levels of business that we used to have,” he said. “Macanese workers will be not affected that much, it will affect the expatriate population more so.”

The company wants to reduce Macau staff to between 13,000 and 14,000 until more are needed after construction at Cotai resumes, possibly this year, said LVS Chairman Sheldon Adelson.

Additional staff for Marina Bay Sands in Singapore will be hired nearer to the time of its opening.

Otherwise it was a good month for Adelson, whose shares came back to life on reports the company plans to spin off its Macau holdings in a public offering.

It was reported that LVS hired Goldman Sachs to advise on an IPO, which likely would be floated in Hong Kong, according to sources cited by Dow Jones.

LVS had no comment, the same report said. But asset sales are an option as well, which the company already has acknowledged as it struggles to dig out from under a debt load in excess of $10 billion.

Shares of Las Vegas Sands (NYSE: LVS) leapt as much as 12  percent on the IPO news before slipping back to advance in single digits. At press time the stock stood at US$9.38. It has traded as high as $69.99 in the last year and as low as $1.38.

CROWN CASINO DEAL RAISES OPPOSITION IRE

The Government of Australia’s state of Victoria wants to hike the tax on poker machines at Crown Casino by 10.5 percent over the next six years in exchange for allowing the casino another 150 table games.

The increase would bring the rate to 32.57 percent by 2015 from the 22.25 percent the casino pays now.

The state’s Gaming Minister Tony Robinson said the increase will bring Crown into line with taxes paid by other pokie operators and would net the Government A$60 million in additional revenue over the next four years.

The increase in gambling capacity will allow the casino 100 tables dedicated to poker and 50 more tables for roulette and other games, bringing the total to 500. The increase would result in 300 new jobs, the casino said.

However, the plan has provoked outrage among Opposition leaders, who claim it was crafted in secret, and it could be blocked when it reaches the parliament.

Opposition gaming spokesman Michael O’Brien accused the Government of being reliant on gaming revenues and said that at a time when Victorians are facing economic hardship they needed more support for problem gamblers, not increased gaming.

“We will use the parliamentary process to use the scrutiny that [Premier] John Brumby’s tried to avoid and to engage in the consultation that John Brumby’s refused to do,” he said.

CANADIAN LOTTERY TAPPED FOR TV SHOW IN VIETNAM

Canadian Pacific Lottery has received approval from the Vietnamese government to begin exclusive broadcasting of the Hanoi Lottery Draw on the country’s state-run television.

The 30-minute show, a first for Vietnam, will air daily nationwide during prime time beginning July 1 and will broadcast only daily lottery draws and results, according to a report on the Gaming Intelligence news site.

PLC said it has been asked by Vietnamese Lottery authorities to assist in the development, launch and ongoing production of the show.

“This development marks a major milestone in the ongoing progress of the Vietnamese Lottery program and will also significantly assist in the boosting of our brand nationally in Vietnam and regionally throughout Southeast Asia,” said PLC founder David Aftergood.

Coinciding with the launch the Lottery will also begin selling a new online game supplied exclusively by PLC under its existing 10-year contract with Vietnamese Lottery. This new offering will be available only through the lottery’s retail network.

GALAXY HOLDING ITS OWN IN MIDST OF DOWNTURN

Macau casino and gambling operator Galaxy Entertainment Group posted pre-tax earnings of HK$544 million in 2008 and has recorded three consecutive quarters of growth, including a 29 percent increase in EBITDA in the first quarter to $233 million compared with the fourth quarter of last year.

“It’s associated with things like our cost-savings initiative and managing other things pretty aggressively such as labour and marketing, along with other programmes,” said Chief Financial Officer Robert Drake.

The company expects to save $200 million a year.

Revenues hit $10.5 billion in 2008 and $2.62 billion in the first quarter as VIP volumes grew 17 percent to $55 billion against what Galaxy described as a market decline of 22 percent. The company’s flagship StarWorld casino saw EBITDA increase by 31 percent from 4Q08 to 1Q09 to $204 million.

Galaxy said its gaming market share in 2008 increased from 10 percent to 13 percent.

The end result, however, was a net loss of $11.39 billion for the year, largely due to a $12.3 billion non-cash write-down of the value of the company’s Macau license.

PLANNED DUBAI RESORT GETS MGM MIRAGE TOUCH

MGM Mirage has signed an agreement with the developers of a US$4 billion resort in Dubai to manage MGM Mirage-branded hotels there.

Pearl Dubai FZ will own and finance a 250-room Bellagio hotel, a 350-room MGM Grand hotel and a 30-suite Skylofts hotel as part of the Dubai Pearl resort complex, billed as an “integrated city” of hotels, apartments, condominiums and retail and convention space.

MGM Mirage Hospitality, a division of the Las Vegas-based casino giant, will operate the three branded hotels.

No timetable was given for the hotels or Dubai Pearl, which would be located along the Persian Gulf coast and would tower over the man-made Palm Jumeirah Island resort.

However, the development comes at a difficult time for MGM Mirage and Dubai, which is part of the United Arab Emirates, as both are now reeling from a global economic slump that has hurt tourist destinations like Las Vegas and the UAE and depressed real estate values, forcing many developers to abandon projects.

MGM Mirage and business partner Dubai World last month negotiated a last-minute plan with banks to guarantee funding for CityCenter, their joint-venture US$8.5 billion mixed-use resort on the Las Vegas Strip, which is scheduled to open the end of this year.