While others exit, MGM wants back in to Atlantic City gambling

Reuters News
Posted: Sep 09, 2014 7:24 PM

By Hilary Russ

NEW YORK (Reuters) - As other companies abandon the New Jersey gambling hub of Atlantic City, MGM Resorts International could learn on Wednesday whether it will be allowed to re-enter the market as regulators review an old business deal that prompted the company effectively to pull out.

The company asked New Jersey gaming regulators for permission to reclaim its 50 percent stake in the Borgata Hotel Casino and Spa, one of the best-performing casinos in a city full of recent failures.

The state's Casino Control Commission is considering MGM's request at a meeting on Wednesday. Boyd Gaming Corp. owns the other 50 percent and has effectively controlled the Borgata for several years. The Borgata and MGM did not return calls seeking comment on Tuesday.

Winning approval would provide resolution to a years-long saga that started when MGM pulled up stakes because of New Jersey's concerns that MGM business partner Pansy Ho, a Macau-based gambling magnate and Hong Kong’s richest woman, was an unsuitable partner.

In 2005, New Jersey's gaming enforcement division began investigating MGM's affiliation with Ho, whose father built a gambling empire in the southern Chinese territory. MGM had a joint venture in Macau with Ho.

Before New Jersey reached any findings in its investigation into Ho's suitability, MGM pulled out, putting its 50 percent Borgata ownership into a fund controlled by a trustee, who was supposed to sell the interest if MGM didn't find buyers.

But MGM received an extension, and then a hold, on plans to sell its interest controlled by the fund. In the meantime, its joint venture with Ho went public in 2011, leaving MGM with a majority stake of 51 percent and Ho with a smaller slice.

Its request to re-enter Atlantic City prompted state gaming regulators to reopen their investigation, the results of which are expected to be introduced as evidence in Wednesday's hearing, a casino commission spokesman said.

Three Atlantic City casinos have closed this year and a fourth, Trump Plaza, is closing next week. On Tuesday, Trump Entertainment Resorts Inc. filed for bankruptcy, saying that its other casino, the Trump Taj Mahal, could also close in November if it can't cut expenses and reach a deal with its largest union.

So far eight casinos, including Trump Taj Mahal, remain standing this year. Borgata did better than the rest over the most recent quarter, when it posted net income of about $8.8 million.

The Borgata also said in federal regulatory filings that it leads New Jersey's newly legalized online gambling market with a 28.4 percent share of the market for the first half of 2014. It also claims more than a quarter of the city's land-based table games market.

(Reporting by Hilary Russ; Editing by Cynthia Osterman)