Thursday, March 01, 2007

Nevada gaming regulators said Tuesday that MGM Mirage's 50-50 partnership
with Chinese businesswoman Pansy Ho in an under-construction hotel-casino in
Macau was suitable under the state's regulations covering investments
outside the Silver State. After a hearing that lasted more than five hours,
the Gaming Control Board unanimously approved the arrangement in which MGM
Mirage will own 50 percent of a company that is building the $1.1 billion
MGM Grand Macau. The resort is expected to open by the end of the year with
600 hotel rooms and a casino with 345 table games and 1,035 slot machines. A
Chinese company controlled by Pansy Ho owns the other half of the operation.
The Nevada Gaming Commission will act on the control board's recommendation
at a meeting in late March.
Two weeks ago, MGM Mirage announced plans to build a second hotel-casino in
Macau under the same joint venture agreement with Ho, who holds a
subconcession granted by the Macau government to develop and operate casinos
in the Chinese enclave. The three-member panel questioned both Pansy Ho and
her business associate and sister, Daisy Ho, about their business and
financial relationships with their father, controversial Chinese billionaire
Stanley Ho. He owns several gambling halls in Macau, including the Lisboa
Casino near the site of the MGM Grand Macau. The sisters told gaming
regulators that significant portions of their initial $80 million investment
in the MGM Grand Macau came from their father in the form of a trust fund.
Both Pansy and Daisy Ho said they had received several financial gifts from
their 84-year-old father, who for years has fought allegations that his
Macau casinos have been involved with organized crime triads engaged in
money laundering, loan sharking, drug trafficking and prostitution. Stanley
Ho's sister, Winnie, has alleged the triads are involved in the casino. When
Gaming Control Board Chairman Dennis Neilander asked the sisters if they
would continue to accept any financial gifts from their father, both said
they would not decline overtures. "That kind of gets to the heart of the
matter as to why we're here," Neilander said. "The underlying question is
whether or not (Pansy Ho) can be influenced by her father." The control
board became convinced of the sisters' independence on several fronts. All
three panelists cited the complicated legal language in the shareholder
agreement that covers MGM Grand Paradise, the company that is building and
will operate the Macau casino. Also, the language covering the subconcession
helps alleviate any concerns of outside influence. But during testimony
before the panel, Pansy Ho expressed to gaming regulators that she has
proven her independence from her famous father. In 1999, she decided to
reduce her work force following a merger with a rival company, a move
Stanley Ho disagreed with. In the end, Pansy Ho's decision held up.

"This is a tremendous opportunity to work with a company such as MGM
Mirage," Pansy Ho said. "It has been a great relationship."

Gaming Control Board member Mark Clayton said after the hours of testimony
that it was clear there was nothing in the background of both Pansy and
Daisy Ho that would make them unsuitable in the eyes of regulators. Clayton
said he was comfortable that Stanley Ho wouldn't be able to influence the
operations of the MGM Grand Macau.

"I'm confident that she has proven her independence from her father and I
feel very comfortable in approving this application," Clayton said.

Control Board member Randy Sayre said any questions he had about Pansy Ho's
independence were answered during the hearing.

"I'm confident that Pansy Ho and Daisy Ho are exercising their stewardship
for these corporate entities on their own merits," Sayre said. "I believe
the appropriate safeguards are in place."

MGM Mirage Chairman Terry Lanni said after the hearing that he was never
concerned that either of the Ho sisters would be found unsuitable as
joint-venture partners.

"I've been in this business for 30 years and I felt very comfortable since
day one," Lanni said. "The control board asked appropriate questions, and
that's the responsibility of the regulators."

Longtime Nevada gaming attorney Bob Faiss, representing MGM Mirage, called
the hearing historic. It was the first time state regulators considered an
application under Nevada's foreign gaming statutes in connection with a
gaming operation outside the United States.

MGM Mirage took all morning to present its evidence that its Macau joint
venture was independent.

Former Nevada Gaming Commission Chairman John O'Reilly, the Nevada attorney
for the Ho sisters, gave the control board a brief outline of the career
paths and successes of the two women.

Pansy Ho, 44, is a graduate of the University of Santa Clara in Northern
California and turned her South China transportation operation 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.