James Packer's Crown has played down the possibility of damage to its US growth aspirations after a powerful New Jersey gaming regulator classed the sister of its joint venture partner in Macau as an "unsuitable" business partner.
A confidential report by the New Jersey Division of Gaming Enforcement (DGE) has found that local casino operator MGM Mirage should be "directed to disengage" from its Macau joint venture partner, Pansy Ho, daughter of Asian gambling tycoon Stanley Ho. Among other things, the document highlighted compliance problems and deficient due diligence.
It represents the first adverse ruling against the second generation of the Ho family by a US state gaming body and might be used by other American jurisdictions to force a divestment by the clan of all of its US activities and partnerships.
News of the overnight findings sparked concerns that the contagion could also spread to Crown's billion-dollar tie-up with its Macau partner, Melco International.
Lawrence Ho, brother of Pansy, is the chief executive of Melco, which together with Crown forged a $US8.7 billion ($11.3 billion) casino business in 2006 called Melco Crown Entertainment to build a string of casinos and hotels.
But last night, Anthony Klok, the head of Crown's investor relations and director of its international business development, said the New Jersey investigation would not affect its dealings with Lawrence Ho or Crown's separate and independent operations in the US.
"It has no affect on us, our relationship with Lawrence or Melco … the Lawrence-Melco relationship has been approved in Australia and in Nevada some time ago," Mr Klok said.
He said when Crown sought approval for its purchase of the Cannery Casino Resorts business in the US for $US1.75 billion, it was fully investigated and cleared by Nevada gaming regulators. This would have included a review of Crown's associates, including Melco and Lawrence Ho.
The investigation into Ms Ho was kicked off in 2005 after MGM Mirage sought a renewal of its Borgata casino licence in Atlantic City which sub-sequently extended into a review of the $US1.25 billion MGM Grand Macau in which Ms Ho has a 50 per cent stake.
In a filing to the US Securities and Exchange Commission, the chief financial officer of MGM Mirage, Daniel D'Arrigo, said the DGE recommended that its partner be found to be unsuitable and MGM was directed to disengage itself from any association.
However, Mr D'Arrigo added that the report was merely a recommendation and was not binding on the New Jersey Casino Control Commission, which will have the final say. (Credit: The Sydney Morning Herald)
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