MGM Mirage's ( MGM) announcement of a $5 billion casino development in Atlantic City just happens to come as the company is in a standoff with the city over licenses in Macau. On Wednesday, the Las Vegas-based casino operator said it plans to use 72 acres of land it owns in the New Jersey gambling mecca to
develop a massive resort . The news should be welcome to Atlantic City, which is struggling with declining revenues because of increased competition from nearby Pennsylvania and New York. But MGM's development -- long expected by casino insiders -- also could provide a special benefit to the company. Some industry watchers are wondering whether the timing of the announcement is designed to pressure New Jersey state regulators to speed up the much-delayed approval of the company's license to operate a casino in Macau, the region of China that is the world's largest gambling market. The speculation is that MGM is dangling this $5 billion project in front of regulators as a way of saying, "We better get this Macau license, or we won't build the new project in Atlantic City," says one gaming industry source who closely follows the market. Since MGM operates casinos in the U.S., it must get clearance from local regulators to operate a Macau casino. While Nevada and Mississippi have given the green light for the Macau license, New Jersey casino regulators have been investigating MGM and its Asian partners for more than a year.
If New Jersey doesn't approve the license, MGM could either decide to leave the Atlantic City market or abandon the Macau project. Investigators are looking into Pansy Ho, MGM's partner on the Macau casino. She is the daughter of Stanley Ho, the billionaire who held a monopoly on the Macau casino industry for 40 years before China opened up the market to foreign investors. Over the years, Stanley Ho's background has been questioned by numerous newspapers and government regulators, who have alleged ties between his casinos and organized crime. The Division of Gaming Enforcement, which is a division of the New Jersey Attorney General's office, had promised last year to deliver a report about Pansy Ho and MGM before the end of 2006. One source close to the investigation says a report is likely to be issued in the next month and a half. At that point, the attorney general will give input, and the New Jersey Casino Control Commission will eventually make a decision on the matter. The company doesn't plan to file for government approval for the new Atlantic City casino until later this year or in early 2008. Groundbreaking is expected in 2008, with an anticipated opening in 2012. MGM officials could not be reached for comment. Shares of the company were down $1.07, or 1.1%, to $98.68 on Wednesday afternoon.