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Howard Stutz

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Nevada commission finds MGM Mirage venture suitable

26 Mar 2007

By Howard Stutz

LAS VEGAS, Nevada – (PRESS RELEASE) -- Nevada gaming commissioners said they had questions and concerns going into Friday's suitability hearing on the relationship between MGM Mirage and its Chinese business partner in a $1.1 billion casino under construction in Macau.

By the end of the four-hour meeting, however, the complex legal issues were given enough debate so that the Nevada Gaming Commission was comfortable in approving the suitability of the business venture between the gaming industry's second-largest casino operator and the daughters of a controversial Chinese billionaire.

The five-member commission unanimously approved Las Vegas-based MGM Mirage's involvement with Pansy Ho in the MGM Grand Macau, a 50-50 joint venture that is expected to open by the end of the year. The commission agreed with the Gaming Control Board's recommendation of approval last month.

The MGM Grand Macau will have 600 hotel rooms and a casino with 345 table games and 1,035 slot machines. MGM Mirage Chairman Terry Lanni said the company expects to employ 6,000 workers at the hotel-casino.

Pansy Ho is the daughter of Stanley Ho, an 84-year-old Hong Kong businessman who owns several Macau gambling halls, including the Lisboa Casino near the site of the MGM Grand Macau. For years, Stanley Ho has fought allegations that his Macau casinos have been involved with organized crime triads engaged in money laundering, loan sharking, drug trafficking and prostitution.

While Pansy Ho, and her business associate sister, Daisy Ho, told gaming regulators that significant portions of their initial $80 million investment in the MGM Grand Macau came from their father in a trust fund, they said he does not wield any undo influence over their business dealings.

"They have been the most cooperative and the most investigated non-(gaming license)-applicants ever," said Las Vegas attorney John O'Reilly who represented the Ho sisters. "They were here voluntarily."

Gaming commission Chairman Pete Bernhard, following a 90-minute presentation by MGM Mirage and the Ho sisters about the business arrangement, said he wanted answers to several regulatory and legal questions about the deal.

Bernhard said he had concerns about whether or not the money the Ho sisters invested in the transaction came "from a suitable source with good character and integrity." Also, Bernhard wanted assurances that Nevada gaming regulators could have oversight over the MGM Grand Macau, even though the casino is being operated halfway around the world.

The gaming commission was concerned that finding the arrangement suitable between MGM Mirage and Pansy Ho could bring negative publicity to the state. Bernhard alluded to a monthlong Internet campaign against the deal being waged by an upstate New York citizens coalition backed by a fundamentalist Christian minister.

After several hours of discussion between Bernhard, who is an attorney, and three gaming lawyers from the Las Vegas firm Lionel Sawyer and Collins, who were representing MGM Mirage, the commission seemed to have the answers they sought.

"We're not licensing Dr. Stanley Ho," Commissioner Art Marshall said. "We're determining whether or not Pansy Ho and Daisy Ho are suitable to do business with MGM Mirage."

Bernhard said past actions by the Ho sisters in their business dealings and language in the joint venture agreement ensure that regulators were on safe grounds in backing the deal.

In addition, Pansy Ho agreed to allow Nevada gaming regulators to view the financial records of the MGM Grand Macau if they ask.

"That and the combination of the safeguards that were set forth in the legal agreements with MGM show that there can not be any third party control interference in the operation," Bernhard said.

After the commission voted, a San Francisco-based attorney representing Stanley Ho's estranged sister, Winnie Ho, read a five-page statement to the gaming commission, claiming Stanley Ho has tried to use Pansy Ho in the past to operate a casino.

Winnie Ho has alleged that the Chinese triads are involved in her brother's casino operations.

The arrangement was the first such deal ever considered by Nevada gaming regulators under the state's foreign gaming act, which covers state gaming licensees doing business outside of Nevada.

"This ranks as one of the most important decisions ever made by the commission," Las Vegas gaming attorney Bob Faiss, representing MGM Mirage, said in response to a question posed by Commissioner Sue Wagner.

Bernhard said it was important to build a record for future joint ventures between Nevada casino operators and foreign business owners.

"Licensees going into other jurisdictions and other foreign entities coming here need to see how we determine the language of the statues," Bernhard said.

Pansy Ho, 44, is a graduate of the University of Santa Clara in Northern California and turned her south China transportation business from a small ferryboat operation into a multifaceted business publicly traded on the Hong Kong Stock Exchange. O'Reilly said Ho's company has a market capitalization of $3.35 billion.

Daisy Ho, 42, who graduated from the University of Southern California, serves as her sister's co-director and chief financial officer.

MGM Mirage contributed $180 million to the joint venture and another $100 million in financing. Pansy Ho put up $80 million. Several bank institutions financed the rest of the development's costs.

The Mississippi Gaming Commission approved the alliance between MGM and Pansy Ho in February 2005. New Jersey must also OK the plan, but the attorney general's office is still looking into the arrangement.

George Rover, an assistant attorney general for New Jersey representing the state's Division of Gaming Enforcement, watched the hearing. He did not want to comment on the matter.

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