The fate of casino gaming in Saipan is currently up in the air, as the monopoly license holder – Imperial Pacific International – faces increasing legal action on multiple fronts, and its parent confronts a possible delisting from the Hong Kong Stock Exchange. IGamiX Managing Partner Ben Lee points out the missed clues that led to such a scenario and the possible outcomes going forward.
IPI is currently facing calls for the revocation of its casino license by the Commonwealth Casino Commission (CCC), or the resignation of the CCC board – as the group has failed to pay its tax since its closure at the beginning of the pandemic.
Ben Lee points out that the current board of the CCC is unwilling to do either, as both the local belief is that members of the board are waiting and hoping to be paid, and retrospectivel at that.
“The popular perception is that once they’re gone, and if by any chance a new investor or new licensee comes in, they would not get the back pay. Under the current law, they would be retroactively paid back to 2020 which was when their funding was suspended, if new license payments were to miraculously come in. They obviously think a dead bird in hand is better than none in the bush.”
The CCC has given notice to IPI that it has 30 days to repay some $62 million it owes the commission, with a possible license revocation only after a an “adequate and reasonable period” to fix its issues. IPI reportedly faces other millions in dues to the commonwealth, aside from its obligations to stakeholders.
The best outcome in their view would be that “a new investor takes over from IPI, keeping the same license that had been issued under the gaming regulation. That’s what the current casino commission is waiting and hoping for”.
But what interest is there by investors in the property which has gone through so much drama – from FBI raids, suspicions of money laundering, illegal construction workers, failed payments, legal disputes over tax and much more?
“IPI keeps claiming that it is talking to investors. Over the past three years, there have been various “investors” from Korea, Japan and elsewhere,” notes Lee. Despite these “talks”, IPI hasn’t seen much interest – and it hasn’t published financial results in over a year.
The company is facing delisting from the Hong Kong Stock Exchange if it fails to remediate its issues, with trading of shares suspended since April of 2022 and multiple winding up procedures levelled against it involving millions of dollars in claims by investors – in courts from the United States to Hong Kong.
“Even if they don’t revoke the license, I think if the Hong Kong entity goes under, the issue is going to be moot anyway,” notes Lee.
Monopoly woes
The idea of revoking the license entirely could actually place Saipan back on a stronger footing going forward, notes Lee.
“That could pave the way to new legislation, enabling what I recommended many years ago: a small cluster of two or three casinos. And it would allow for them to tender it out property this time. That then could bring back some positivity and energy to the island, which they currently lack”.
Lee notes that a previous study, carried out over a decade ago – had recommended just such a scenario “because the competition will then create gravity towards attracting more tourism”.
That, evidently, did not materialize.
“The previous administration bulldozed the casino legislation through; they never had a referendum, they never sought the permission of their fellow CNMI congressmen and senators. They just bulldozed IPI through. And basically, the quagmire they find themselves in right now is one that I warned them over a decade ago,” notes Lee.
“The fact that Saipan went it alone and granted a license after a trip by Saipan lawmakers to Macau speaks for itself,” he opines.
Interestingly, in 2015 when IPI opened its shopping-mall casino former Sands China Macau executive Mark Brown was at the helm of the property when it was reporting staggering monthly VIP volumes which trumped even those of properties in Macau.
When he stepped into the role, the project was estimated to build up into a $7 billion behemoth, something most analysts at the time deemed totally unfeasible. Brown eventually left the role in December of 2017, returning to IPI some nine months later, only to leave again when the FBI finally raided their offices.
Its prospects have only worsened since then, as there is some chatter that the IPI saga may have ended the CNMI on China’s blacklist . But it may not be too late for the tables to turn.
