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the Backlash

Roger Gros, Publisher


omeone who has been around gaming as long or longer than I have will always get my respect. I learned a lot from I. Nelson Rose

over the years, but I always remember a piece that he wrote about how cyclical gaming is, called the “Third Wave of Gambling.” Rose, a scholar and legal expert, looked at the

history of gambling over the past 200 years or so and discovered that its acceptance rose and fell in direct relation to scandals that have blemished the activity over the years. His implication, because the cycle has thus far remained unbroken (and we are still in the third “expansion” phase), is that a time will come when gambling will once again be reviled because a major scandal has tainted the activity. Since Rose’s postulation is now more than 20

years old, I was beginning to doubt that it would ever happen again. After all, gaming in the U.S. and most other developed countries has become almost universally accepted. Strict regulations in most jurisdictions have kept criminal elements out of the industry. So maybe this theory was just that. But then New Jersey started sniffing around the

MGM Mirage-Pansy Ho deal in Macau as it con- sidered whether it was acceptable under state gam- ing regulations. Without recapping the entire episode, MGM surrendered its New Jersey license rather than giving up its Macau partnership with Pansy Ho. A report from the Division of Gaming Enforcement indicated that they objected to Pansy’s close business ties with her father, Stanley Ho, who, said the report, was and is intricately linked to Chinese organized crime. That event was later followed by a “special

report” issued by the Reuters news agency linking a Macau VIP operator with a murder-for-hire trial in Hong Kong that involved some criminal activity in a Macau casino. The report suggested that this kind of activity was just the tip of the iceberg on Macau and organized crime. Now, both the New Jersey report and the

Reuters story have weaknesses, procedural errors and holes as big as Mack trucks, but they bring up concerns about the Macau regulations that could blow up in the face of everyone involved in Macau and the industry as a whole. There is clearly an organized crime element involved in the VIP opera- tions in Macau (or “colorful” characters, as one


poster described them on the GGB online blog). Companies knew that going in, but expected that over time, like in Nevada, there would be proce- dures put in place that would eventually eliminate any criminal elements. And that still may happen. Macau regulators say

they license VIP operators for just one year to make sure there is an ongoing review of the companies involved in this area. But clearly, there is some issue here. When Singapore announced that it would require all VIP operators to submit to complete licensing investigations, few if any of the Macau operators said they would participate in this huge new market. What do they have to hide? And what is it that Macau regulators are willing to overlook in their licensing efforts? We know that there is not always fire where

there is smoke, but in this case, the smoke keeps getting thicker and it begins to obscure the truth. Nevada gaming regulators say they can’t impose Nevada standards on Macau regulators, which is true. But they can impose Nevada standards on companies with licenses in Nevada to behave in the manner those companies are expected to behave in Nevada. New Jersey has clearly held MGM Mirage to those standards and the company came up short, at least according to the state’s somewhat question- able report. At any rate, this seems to be “the way things are

done” in Macau, and there is so much money being made under these procedures that it is unlikely any- thing will change anytime soon. U.S. companies need to realize, however, that there are more than just gaming regulations at issue here. I’m sure this issue is keeping the compliance departments of the major companies involved in Macau busy, but it’s hurting some U.S. jurisdictions. New Jersey has lost the participation of MGM Mirage, the second- largest gaming company in the U.S. Other states are now re-examining their approval of the Ho deal with MGM and may also be forced to drop the company. So while I was once confident that a scandal

could never occur that would be big enough to cause re-criminalization of gambling and ending the “third wave” of legalized gambling, I am no longer quite so sure. All I can say is, let’s be careful out there!

Global Gaming Business • May 2010

Vol. 9 • No. 5 • May 2010

Roger Gros, Publisher | Frank Legato, Editor |

Marjorie Preston, Associate Editor

Caitlin McGarry, Assistant Editor

Rich Geller, European Editor

Monica Cooley, Art Director |

David Coheen, North American Sales & Marketing Director

Bina Gupta, Asian Sales & Marketing Director

Bonnie Rattner, Account Executive

Becky Kingman-Gros, Director of Operations


Frank Fahrenkopf, Jr. | Frank Fantini Randall A. Fine

Contributing Editors

Douglas L. Minke | David D. Waddell


Mark A. Birtha, Vice President, Development and Project Manager Marriott International Lodging Development, Las Vegas

Julie Brinkerhoff-Jacobs, President Lifescapes International

Nicholas Casiello Jr., Shareholder Fox Rothschild

Jeffrey Compton, Slot Club Director Compton Dancer Consulting Inc.

Dean Macomber, President, Macomber International, Inc.

Courtney Muller, Group Vice President, Global Gaming Expo Reed Exhibition Companies

Judy Patterson, Senior Vice President & Executive Director American Gaming Association

Jim Rafferty, President, Rafferty & Associates

Thomas Reilly, General Manager, ACSC Product Group Eastern Region Vice President, Bally Systems

Steven M. Rittvo, President, The Innovation Group

Katherine Spilde Contreras, Executive Director,

Sycuan Gaming Institute, San Diego State University

Ernie Stevens, Jr.

Chairman, National Indian Gaming Association

Roy Student, President, Applied Management Strategies

David D. Waddell, Partner

Regulatory Management Counselors PC Casino Connection International LLC.

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The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor.

Copyright 2010 Global Gaming Business LLC. Las Vegas, Nev. 89118

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