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Gambling beyond Nevada: Partnership called suitable28 February 2007
By Howard Stutz
NEVADA -- Nevada gaming regulators said Tuesday that MGM Mirage's 50-50 partnership with Chinese businesswoman Pansy Ho in an under-construction hotel-casino in Macau was suitable under the state's regulations covering investments outside the Silver State.
After a hearing that lasted more than five hours, the Gaming Control Board unanimously approved the arrangement in which MGM Mirage will own 50 percent of a company that is building the $1.1 billion MGM Grand Macau. The resort is expected to open by the end of the year with 600 hotel rooms and a casino with 345 table games and 1,035 slot machines. A Chinese company controlled by Pansy Ho owns the other half of the operation.
The Nevada Gaming Commission will act on the control board's recommendation at a meeting in late March.
Two weeks ago, MGM Mirage announced plans to build a second hotel-casino in Macau under the same joint venture agreement with Ho, who holds a subconcession granted by the Macau government to develop and operate casinos in the Chinese enclave.
The three-member panel questioned both Pansy Ho and her business associate and sister, Daisy Ho, about their business and financial relationships with their father, controversial Chinese billionaire Stanley Ho. He owns several gambling halls in Macau, including the Lisboa Casino near the site of the MGM Grand Macau.
The sisters told gaming regulators that significant portions of their initial $80 million investment in the MGM Grand Macau came from their father in the form of a trust fund.
Both Pansy and Daisy Ho said they had received several financial gifts from their 84-year-old father, who for years has fought allegations that his Macau casinos have been involved with organized crime triads engaged in money laundering, loan sharking, drug trafficking and prostitution. Stanley Ho's sister, Winnie, has alleged the triads are involved in the casino.
When Gaming Control Board Chairman Dennis Neilander asked the sisters if they would continue to accept any financial gifts from their father, both said they would not decline overtures.
"That kind of gets to the heart of the matter as to why we're here," Neilander said. "The underlying question is whether or not (Pansy Ho) can be influenced by her father."
The control board became convinced of the sisters' independence on several fronts. All three panelists cited the complicated legal language in the shareholder agreement that covers MGM Grand Paradise, the company that is building and will operate the Macau casino.
Also, the language covering the subconcession helps alleviate any concerns of outside influence.
But during testimony before the panel, Pansy Ho expressed to gaming regulators that she has proven her independence from her famous father. In 1999, she decided to reduce her work force following a merger with a rival company, a move Stanley Ho disagreed with. In the end, Pansy Ho's decision held up.
"This is a tremendous opportunity to work with a company such as MGM Mirage," Pansy Ho said. "It has been a great relationship."
Gaming Control Board member Mark Clayton said after the hours of testimony that it was clear there was nothing in the background of both Pansy and Daisy Ho that would make them unsuitable in the eyes of regulators. Clayton said he was comfortable that Stanley Ho wouldn't be able to influence the operations of the MGM Grand Macau.
"I'm confident that she has proven her independence from her father and I feel very comfortable in approving this application," Clayton said.
Control Board member Randy Sayre said any questions he had about Pansy Ho's independence were answered during the hearing.
"I'm confident that Pansy Ho and Daisy Ho are exercising their stewardship for these corporate entities on their own merits," Sayre said. "I believe the appropriate safeguards are in place."
MGM Mirage Chairman Terry Lanni said after the hearing that he was never concerned that either of the Ho sisters would be found unsuitable as joint-venture partners.
"I've been in this business for 30 years and I felt very comfortable since day one," Lanni said. "The control board asked appropriate questions, and that's the responsibility of the regulators."
Longtime Nevada gaming attorney Bob Faiss, representing MGM Mirage, called the hearing historic. It was the first time state regulators considered an application under Nevada's foreign gaming statutes in connection with a gaming operation outside the United States.
MGM Mirage took all morning to present its evidence that its Macau joint venture was independent.
Former Nevada Gaming Commission Chairman John O'Reilly, the Nevada attorney for the Ho sisters, gave the control board a brief outline of the career paths and successes of the two women.
Pansy Ho, 44, is a graduate of the University of Santa Clara in Northern California and turned her South China transportation operation from a small ferryboat operation into a multifaceted business publicly traded on the Hong Kong Stock Exchange. O'Reilly said Ho's company has a market capitalization of $3.35 billion.
Daisy Ho, 42, who graduated from the University of Southern California, serves as her sister's co-director and chief financial officer. .
MGM Mirage contributed $180 million to the joint venture and another $100 million in financing. Pansy Ho put up $80 million. Several bank institutions financed the rest of the development's costs.
The Mississippi Gaming Commission approved the alliance between MGM and Pansy Ho in February 2005. New Jersey must also OK the plan, but the attorney general's office is still looking into the arrangement.
The Associated Press contributed to this report.
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