Inside Asian Gaming

inside asian gaming July 2014 6 The Northern Marianas, a US Pacific territory, is moving to tap its destination gaming potential, but legalization on the main island of Saipan is a mess. By Muhammad Cohen Cover Story Trouble in Paradise T he Commonwealth of Northern Marianas Islands (CNMI) faces a severe financial crisis and needs more casino revenue in the worst possible way. That’s how the government is trying to get it: in the worst possible way. 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 and CNMI’s lone operating casino, has new ownership, Hong Kong-based Mega Stars Overseas, with grand plans that are mired in a public feud between Mega Stars and Tinian regulators. After threatening to cancel further investment in protest over the authorization of a competing casino on Saipan, 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 and no obvious means to finance the mandated $2 billion 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 US minimum wages. ‘Only US City in Asia’ “The Northern Mariana 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 future of CNMI in many respects.”