MGM Mirage likely to leave Atlantic City
One of the largest companies in the casino industry, MGM Mirage Inc. announced on Thursday that they have accepted a $548 million charge against their earnings for the fiscal fourth quarter. This is a reflection of a significant decline in value for a parcel of land they have yet to develop in Atlantic City, New Jersey.
Adjacent to the Borgata Hotel, Casino and Spa lies a 72 acre lot which is owned by MGM. MGM Mirage inc. had originally intended to construct a massive $5 billion mega-resort complex on the site, but the project was eventually axed due to the massive recession and the credit crises which has affected the entire globe.
Things appear even worse now, as the company has a significant business partnership with one of the world famous casinos in Macao. This partnership has placed the company's status with the New Jersey gaming commission in question, and MGM Mirage Inc seems to be ready to abandon New Jersey entirely.
In the early part of February, MGM Mirage announced their strategic decision to divest their significant ownership, a full fifty percent stake,in the Borgata Hotel Casino and Spa. This followed on the heels of the New Jersey Division of Gaming Enforcement deeming MGM's partnership with Macau's Pansy Ho to be unacceptable. Pansy Ho's father, Stanley Ho, is believed by the Division to have significant ties with Chinese organized crime syndicates, leading them to order MGM Mirage to sever ties with them. This significant regulatory demand has unquestionably threatened MGM's investment in the Macau casino, so MGM Mirage Inc is attempting to work out some sort of compromise with the New Jersey Division of Gaming Enforcement. Meanwhile, they have created a trust for their shares of the Borgata Hotel, Casino and Spa so they can mull over the decision of whether to sell their portion of the premier Atlantic City casino.
The other half of the Borgata is owned by Boyd Gaming Corp, who is also in charge of the day to day operation of the casino. Boyd is the most likely company to purchase the Borgata in the likely case of MGM failing to settle with the gaming commission and deciding to pull out of Atlantic City. If this is the case, MGM will almost certainly sell the adjacent undeveloped property.
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