Inside Asian Gaming

July 2014 inside asian gaming 11 visited Hong Kong and Macau and met 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 Stars Entertainment, also based in Hong Kong, and the owners of the CNMI’s only operating casino, the Tinian Dynasty. The law has since been challenged in court, and two petition campaigns are under way to place a referendum on gaming in Saipan on the ballot in November. Voters on the island, the most 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 from other business taxes for its 40-year license term. “Incompetence” is how Mr Mendiola-Long describes this provision. Tinian’s gaming tax rate is 15% of gross gaming revenue on mass play and 5% on VIP. 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 $30 million to restore pension benefits cuts ahead of the November election, when he’ll be seeking re-election, along with most legislators. Casino supporters brand opponents as enemies of retirees. Suspicions that the process favored Best Sunshine grew when the Saipan Lottery Commission, which has been charged with evaluating the bids because a Commonwealth Gaming Commission has yet to be seated, threw out Marianas Stars’ application for failure to pay the $30 million deposit, which government officials previously said had been received, then reversed its decision, drawing a threat of legal action from Best 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 Commonwealth Gaming Commission. Best Sunshine would like to find an existing facility that it can convert into a gaming hotel while building its resort. Critics say that statement telegraphed the group’s plan to open a casino and then delay other development plans indefinitely. >> Cover Story