IAG July 2014 - page 6

inside
asiangaming
July2014
6
TheNorthernMarianas, aUSPacific territory,
ismoving to tap itsdestinationgamingpotential,
but legalizationon themain islandof Saipan isamess.
By
MuhammadCohen
Cover Story
Trouble
inParadise
T
he Commonwealth of Northern Marianas Islands
(CNMI) faces a severe financial crisis and needs more
casino revenue in theworstpossibleway. That’show the
government is trying toget it: in theworst possibleway.
Legislation to authorize a single US$2 billion casino
resort in Saipan, CNMI’s main island where voters have twice
rejected casino legalization, was approved at lightning speed amid
corruption allegations. The gaming law gives the cash-strapped
government just a fixed $15 million annual gaming license fee over
the 40-year license term, with no additional tax on casino revenue.
A judge has halted awarding the Saipan license, and opponents are
petitioning for another referendum.
Tinian Dynasty Hotel and Casino, the struggling casino on the
neighboring island of Tinian andCNMI’s lone operating casino, has
newownership, HongKong-basedMega StarsOverseas, with grand
plans that aremired in apublic feudbetweenMegaStars andTinian
regulators. After threatening to cancel further investment in protest
over the authorizationof a competing casinoonSaipan,Mega Stars
bid for the Saipan license, but is now suing to stop it. Both Saipan
license applicants, though linked to gaming, have no track record in
resort development andno obviousmeans to finance themandated
$2billion investment.
But these issues shouldn’t obscure CNMI’S potential as a
gaming destination. The self-governing US territory, which lies
about 1,200 miles east of Manila and 1,000 or so miles south of
Japan, offers white sand beaches and turquoise waters, and with
special visa-free access for Chinese visitors is well-positioned to
cash in on China’s explosive demand for overseas travel. Saipan
has 90% of the commonwealth’s 54,000 inhabitants and 100%
of its tourist arrivals, which numbered 433,736 for the fiscal year
ended September 2013. The economy has relied almost entirely on
tourism since its garment industry collapsed after 2007 when the
US extended federal labor laws and most immigration rules there
following revelations of sweatshops turning out clothing labeled
“Made in USA” that were the work of migrant laborers paid a
fraction of USminimumwages.
‘OnlyUSCity inAsia’
“TheNorthernMariana Islands have great potential for tapping the
greater Asia growth story in tourism,” says Global Market Advisors
partner Jonathan Galaviz, a travel and gaming industry consultant
who has visited the commonwealth to research the market. “The
beaches, overall environment and US oversight bode well for the
futureof CNMI inmany respects.”
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