IAG July 2014 - page 11

July2014
inside
asiangaming
11
visitedHong Kong andMacau andmet with prospective investors,
trips paid for by Esteem Capital. Media reports tie Esteem Capital
to Macau junket investor Hengsheng Group, which also is linked
to Hong Kong-listed Imperial Pacific International Holdings, the
parent company of one of Saipan’s two bidders, Best Sunshine
International.
Some legislators and others contend the bill was written in
Hong Kong and claim its legal deficiencies require immediate
amendment. One of them is the only other formal bidder, Marianas
StarsEntertainment, alsobased inHongKong, and theownersof the
CNMI’s only operating casino, theTinianDynasty.
The law has since been challenged in court, and two petition
campaignsareunderway toplacea referendumongaming inSaipan
on the ballot inNovember. Voters on the island, themost populous
of the commonwealth, rejected casinos twice before, in 1979 and
again in 2007.
Lawmakers have proposed a new gaming bill that would repeal
the current legislation and re-enact the law without substantive
changes. Opponents say that’s a trick to thwart a referendum.
The law has drawn criticism on several counts. The gaming tax
was set at a flat US$15 million annually with the casino operation
exempt fromother business taxes for its 40-year license term.
“Incompetence” is how Mr Mendiola-Long describes this
provision.
Tinian’sgaming tax rate is 15%of grossgaming revenueonmass
play and 5%onVIP. Rota taxes gaming revenue at 10%.
The hefty $2 billion investment requirement has heightened
speculation that the law was tailored for a specific investor, Best
Sunshine, and designed to deter other bidders. The same with the
application process, which requires a $1 million non-refundable
application fee plus a $30 million escrow payment, representing
two years of gaming fee payments. Governor Inos, who took office
after CNMI’s previous governor and lieutenant governor resigned
in the face of corruption charges brought by the US government,
has pledged to use the $30million to restore pension benefits cuts
ahead of the November election, when he’ll be seeking re-election,
along withmost legislators. Casino supporters brand opponents as
enemies of retirees.
Suspicions that theprocess favoredBestSunshinegrewwhen the
SaipanLotteryCommission, whichhasbeen chargedwithevaluating
the bids because a CommonwealthGaming Commission has yet to
be seated, threwoutMarianasStars’ application for failure topay the
$30million deposit, which government officials previously said had
been received, then reversed its decision, drawing a threat of legal
action fromBest Sunshine.
Marianas Stars has sought to stay in the running by proposing
that two licenses be awarded, an idea rejected out of hand by
the government and lawmakers. Marianas Stars is now suing in
Superior Court, naming Mr Inos, the secretary of finance and the
Lottery Commission as defendants and accusing representatives of
Imperial Pacific of “improperly and illegally” providing unspecified
“benefits” to at least four senators in exchange for their yes votes
on the casino bill, according to news reports.Marianas Stars claims
the Lottery Commission has been “hopelessly compromised” and
wants the award of the license to be decided by the yet to be seated
CommonwealthGamingCommission.
BestSunshinewould like tofindanexisting
facility that it can convert intoagaminghotel
whilebuilding itsresort.Critics say that
statement telegraphed thegroup’splan toopen
a casinoand thendelayotherdevelopment
plans indefinitely.
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