Despite the current crisis with Atlantic City’s gambling industry, MGM Resorts International is looking forward to re-acquiring a formerly owned business – Borgata casino. Reuters announced that there will be a meeting today where the regulating instances will look into the appeal of MGM. It is not yet clear what is the reason for this sudden change of mind.
Some say it is the recent profits of Borgata Hotel Casino and Spa of which MGM wants to establish ownership again. The company has started the process of reclaiming its former fifty percent stake of the gambling facility. Currently, the casino and spa is controlled by the Boyd Gaming Corporation which owns another fifty percent.
Representatives of the two companies have not yet given a public statement on the progress of the negotiations.
The reason for MGM’s withdrawal from the casino was a conflict which went on for years. It started when New Jersey state representatives stated that MGM’s partner in business, Pansy Ho, may be an ‘unfitting partner’. Pansy Ho is the richest businesswoman in Hong Kong after her father left her with a gambling empire based in Macau.
Back in 2005, the business partnership between MGM and Pansy Ho was investigated by the New Jersey’s Gaming Enforcement Division. The investigation looked into ‘shady’ business deals, tax evasion, etc. MGM has also a mutual gambling facility with Ho in Macau.
Due to the negative PR MGM received as a result of the investigation, it decided to leave its fifty percent share to a trustee who was to sell the shares if MGM doesn’t find other buyers. Later on the New Jersey state gave MGM an extension, the joint venture with Pansy Ho was enlisted on the public sector and MGM managed to take the controlling stake package of 51 percent and left Ho with a lesser package.
This move prompted Atlantic City investigators to restart their inspection. The results will be presented at the incoming meeting where MGM will defend its standpoint in a hearing.
Casino experts are questioning MGM’s reasoning behind re-entering the Atlantic City gambling market as it has been on the decline for years. Having in mind the closure of three major Atlantic City casinos which happened for the short period of one month, the prospect of earning profits from gambling revenue is slim. First was Revel Atlantic City casino which closed earlier this month, leaving five thousand employees on the street. Next is Trump Plaza which is the first of Trump Entertainment Resorts to close.
It might not be the last, as Trump’s company has filed bankruptcy and Trump Taj Mahal might follow the same destiny, as its sibling if the management doesn’t find a way to cut costs by the end of November. However, MGM might be right for trying to retake ownership of Borgata, which had an $8.8 in profit for the last quarter and possesses a quarter of the physical gambling tables in the city.
