CNMI Lottery Commission Reportedly Rejects One Casino Application

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Marianas Star Entertainment denies reports that it’s deposit was late

SAIPAN, CNMI (Marianas Variety, May 8, 2014) – The Lottery Commission yesterday rejected the application from Marianas Star Entertainment Inc. for an exclusive Saipan casino license.

Marianas Star failed to make the required $30 million deposit into an escrow account, according to the commission chairman, Commerce Secretary Sixto K. Igisomar.

But this was denied by Marianas Star in a statement to Variety.

Also at yesterday’s meeting, the commission hired the companies that responded to separate requests for proposals for the positions of investigator and of gaming consultant.

Attending the meeting, in addition to Igisomar, were commission members Finance Secretary Larrisa Larson and Department Public Safety Commissioner James C. Deleon Guerrero. Attorney General Joey Patrick San Nicolas was represented by his deputy, Gilbert Birnbrich. Also attending the meeting was the commission’s legal counsel, Jim Stump.

Prior to the executive or closed-door session during which they reviewed the applications, the commissioners allowed a member of the community to comment on the two casino license applicants — Marianas Star and Best Sunshine International Ltd.

Marianas Economic Research & Development Foundation executive director Russell Schow was the only one who spoke. He told the commission to look into the applicants’ background very carefully to avoid getting into trouble with the federal government should any of the investors turn out to have links to criminal gangs or money laundering.

He also expressed concern about the CNMI government’s failure to reach out to other potential investors. He said he knows one that is willing to apply but was not contacted.

He told the commission that based on his research, the $2 billion integrated resort project with a casino would require one to two million visitors every year.

This would require a significant increase in the capacity of the airport and probably additional roads on the island.

His comments were noted before the meeting went into executive session for almost an hour.

Afterward, Deleon Guerrero moved to reject Marianas Star’s application for failing to submit the $30 million deposit on time on May 5, as required by Public Law 18-38’s Section 106.

The motion was seconded and, by acclamation, the commission rejected Marianas Star’s application.

Igisomar noted that the rejection leaves Best Sunshine as the lone applicant. He made it clear, however, that it does not mean that the Hong Kong applicant would be automatically selected. He said it is the commission’s job to review Best Sunshine’s proposal including the business and development plans.

"I ask the public for patience as we review the application thoroughly with the help of the consultants we just hired," he said.

In an interview after the meeting, Igisomar disclosed that Marianas Star did submit a business plan and informed the commission it had deposited $30 million to an escrow account.

But "based on our records we did not get the $30 million on time from the applicant. Whether it [the money] is here or not now, it was not on time."

But the money was deposited before the deadline, according to Mega Stars Overseas Ltd. chief executive officer Cario Hon. Mega Stars owns 25 percent of Marianas Stars Entertainment Inc. while 75 percent is owned by Famous Treasure Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of China Strategic Holdings Ltd. Mega Stars owns Tinian Dynasty on Tinian, the only operating casino in the Northern Marianas. Hon said they only found out about the Lottery Commission’s rejection of their application through media reports. "At this point, we don’t have an official communication from the Lottery Commission stating their decision on our application for a casino license," said Hon. No one from the commission had informed them of its decision. Hon maintains that Marianas Stars Entertainment Inc. turned in the application and business plan, and deposited the money on time. Hon said it would have been better had they been informed first of the decision and then allowed to respond. He said they look forward to hearing from the Lottery Commission whose members, he added, are "reasonable people." Asked for comment, Rep. Trenton Conner, R-Tinian, said "we have to wait and see." He said nobody knows exactly what Marianas Star will do next, but he hopes that its part owner, Mega Star, will continue with its expansion plans on Tinian.

The commission yesterday also approved the hiring of the companies that responded to separate requests for proposals for casino resort development consultant and law enforcement review investigator. It hired California-based B2G Global Strategies to assist the commission in investigating the background of the applicant, and the Florida-based Innovation Group to review the applicant’s business and development plans and strategies.B2G is an international consulting firm specializing in a wide range of services including private investigations, background screening, security consulting, policy guidance and strategic solutions for the business sector and government entities in the U.S., Latin America, Europe and Asia. The Innovation Group is the premier provider of consulting and management services for the gaming, hospitality, leisure and entertainment industries. Igisomar said they approached the Federal Bureau of Investigation which informed them which organizations could do the specific tasks. "We did our due diligence on this. First, we had our DPS commissioner and the counsel work with the FBI and get their references and learn the best way to go about this," he said. The companies, he said, "are legitimate in the sense that they can accomplish what we are looking for. We picked the right individuals."

News of Best Sunshine’s application for a Saipan casino license appeared in the Macau Business Daily. Titled "Junket investor bids US$2 billion for Saipan casino license," the report stated that "an investor in seven Macau VIP rooms has bid for an exclusive casino license on a Pacific Ocean island with an investment of no less than US$2 billion." Casino junket operators bring in high-rolling gamblers. According to the story, "Local junket investor First Natural Foods Holdings Ltd will invest at least US$2 billion (16 billion patacas) in a casino-hotel resort in a Western Pacific Ocean island, if it acquires an exclusive casino license there." It says that the listed firm told the Hong Kong Stock Exchange in a filing that its wholly-owned subsidiary, Best Sunshine International Ltd, had "submitted a business plan on Monday to the authorities of the island of Saipan in the Northern Marianas bidding for the sole gaming license." "First Natural said it aims to build ‘four luxury hotels and villas in four stages’ on the island, which is a territory of the United States. "The firm will make an ‘initial investment of at least US$2 billion… to include a casino and an integrated resort which will include the construction of 2,000 guest rooms as the statutory requirements for acquiring the gaming license. "Macau Business Daily reported that "[i]t is not the first time First Natural Foods has set its sights on the gaming industry; in March, the firm completed the HK$400 million [$51.6 million] acquisition of a firm which has a 5 percent profit interest in the Macau junket company Hang Seng Sociedade Unipessoal Ltda."Hang Seng "operates 86 VIP gaming tables in seven VIP rooms in StarWorld Casino, Wynn Casino, Galaxy Casino, Sands Cotai Central Casino, MGM Casino, and Venetian Casino." The company "raked in profits of over HK$462 million [$59.6 million] in the first 10 months of last year." First Natural Foods said "the Saipan authorities will announce whether it will get the casino license before June 20."

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