By Beth Jinks March 18 (Bloomberg) — MGM Grand Macau co-owner Pansy Ho is an “unsuitable partner” for MGM Mirage because she was financially dependent on her father, casino magnate Stanley Ho , the New Jersey Division of Gaming Enforcement said. The New Jersey Casino Control Commission released a 74-page report as part of MGM’s settlement with the Division of Gaming Enforcement that will result in the company leaving Atlantic City rather than dropping its ties to Macau, the world’s largest gambling market. Pansy Ho and Stanley Ho didn’t respond to requests for comment made through their representatives. The gaming enforcement agency also found Stanley Ho an unsuitable partner. “Numerous governmental and regulatory agencies have referenced Stanley Ho’s associations with criminal enterprises, including permitting organized crime to operate and thrive within his casinos,” it said. The commission approved the planned sale of MGM Mirage’s stake in Borgata Hotel Casino & Spa in Atlantic City, while releasing the report detailing objections to the casino company’s partner in the former Portuguese colony, which is the only place in China where casinos are legal. “The DGE’s report acknowledges there is no evidence that Pansy Ho has engaged in any wrongdoing or been accused of any illegal activity,” MGM Mirage Chairman and Chief Executive Officer Jim Murren said in an e-mailed statement. Regulators elsewhere “have all either determined that the company’s relationship with Pansy Ho is appropriate or that further action is not necessary.” Stanley Funded The gambling enforcement division concluded “ MGM ’s due diligence/compliance efforts to be deficient” in Macau and said Stanley Ho accounted for 90 percent of the funds Pansy Ho used to fund the joint venture. The report included testimony by MGM Mirage executives, including former CEO Terry Lanni and former General Counsel Gary Jacobs, that Stanley Ho’s reputation made him unsuitable as a joint-venture partner. “The character and reputation of Stanley Ho, the father of MGM ’s joint-venture partner, precluded any finding other than that he is unsuitable,” the Division of Gaming Enforcement said. “MGM senior executives conceded his unsuitability during this investigation.” Lytton Ao, a spokesman for MGM Grand Macau, wasn’t immediately able to comment. MGM, based in Las Vegas, fell 4 cents to $12.26 at 4 p.m. in New York Stock Exchange composite trading . The stock has gained 34 percent this year. Stanley Ho’s SJM Holdings Ltd., the casino operator with the biggest market share in Macau, gained as much as 1.6 percent to HK$4.52 in morning trading in Hong Kong. The shares have advanced 4.9 percent this year. Assets in Trust Under the settlement, MGM Mirage will place its 50 percent stake in Borgata and nearby land holdings into a trust pending their sale. The company’s Atlantic City partner, Las Vegas-based Boyd Gaming Corp. , manages the casino and has the right to match any offer. The Division of Gaming Enforcement first raised its concerns in May. Stanley Ho amassed his fortune with a gambling monopoly in Macau that lasted 40 years, ending when the government granted gambling licenses to overseas companies including Las Vegas Sands Corp. and Wynn Resorts Ltd. MGM Mirage and Pansy Ho plan an initial public offering of their Macau casino business later this year. “ MGM Mirage structured its business relationship with Pansy Ho to ensure the highest standards of operation and compliance with all applicable gaming laws and to protect against any improper influence,” the company said. “We have had a very positive working relationship with Pansy Ho and have a spotless operating record at MGM Grand Macau.” Expanding Market Gross revenue at Macau’s casinos increased 10 percent to a record of more than 119 billion patacas ($14.9 billion) in 2009, government data show. Atlantic City gambling revenue tumbled a record 13 percent last year, the third straight annual decline, after nearby states allowed slot machines. Six of the 11 New Jersey casinos wound up in bankruptcy or are restructuring debt, and development has stalled. New Jersey’s budget yesterday projected the casinos may generate 12 percent less in tax revenue in the coming fiscal year. “That the best course of action for our company and its shareholders is to settle this matter and move forward with the compelling growth opportunities we have in Macau,” Murren said last week. Boyd will monitor the sale of MGM’s interest in Borgata, CEO Keith Smith said on a March 2 conference call. “We are pleased with our 50 percent ownership position,” Smith said. “It will continue to be business as usual at Borgata.” To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net
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Pansy Ho `Unsuitable’ Partner for MGM, New Jersey Gambling Regulators Say
