Saipan casino: Boon or bane?
Saipan— Within minutes after the doors opened, the slot machines started clanking and clanging. Patrons sat on rows of blackjack tables, bracing to win or lose. Others loitered around the sprawling high-ceilinged lobby, marveling at the huge electronic screen with a moving picture of waterfalls and the ceiling screen with animated impression of the sky. On the right side stand twin arching staircases with glass railings, where you might imagine a woman in crystal-encrusted gown descending dramatically. Welcome to Las Vegas on Saipan.
Officials of the Imperial Pacific International stood at the lobby to welcome approximately 200 guests, most of whom are Asian tourists, during the July 6 opening of the casino component of the Imperial Pacific Resort Saipan. It opened in a rather uncharacteristically quiet fashion — no fanfare, no dragon dance, no speeches — purportedly attempting to temper public attention to the opulent project that has been saddled with all sorts of controversy.
The still unfinished gold-ornate edifice imposes its presence in the hotel district of Garapan. It is touted to cost $7-billion to finish construction. From the Beach Road view, the 14-storey building sticks out on the horizon, as if announcing Saipan’s ingress into the new era.
It is glorious. No, it is gaudy. The choice of adjectives depends on who you are talking to. One’s review of the Imperial Pacific Resort’s aesthetics can be influenced by the individual’s sentiment and stance on the casino debate. After all, casino gambling is an inherently polarizing issue.
“We are doing this to ourselves. After the garment industry, we let the casino enter into our community as if outsiders are our only economic rescuers,” said a CNMI official, who requested anonymity.
Shaking his head, the official added, “I don’t fault the Imperial Pacific; they’re in the business of doing business and they will do business wherever they are allowed to and they would do whatever it takes. I didn’t blame Willie Tan when he was doing the garment business that drew him criticisms. Our government allowed him to do what he was doing. I only blame those who allowed themselves to be bought.”
The Hongkong-listed Imperial Pacific is controlled by Cui Lijie, a property investor in China and a jewelry collector. She has a net worth of $1.4 billion, according to Forbes magazine. She acquired IPI for $39 million in 2013.
IPI’s high-powered management team includes Mark Brown, chairman of operations, a former executive with Donald Trump’s Atlantic City casinos. Former CIA director James Woolsey serves the team as =independent non-executive director; while retired federal Judge Eugene Raymond Sullivan has been appointed non-executive director.
Like the garment industry that met its demise about eight years ago, IPI suffers from a PR crisis. It was under investigation by the Occupational Safety and Health Administration for the unreported construction-related accidents that caused death and injuries to workers at the site. The OSHA probe opened a can worms, resulting in separate investigations by the FBI, U.S. Department of Labor and other attached federal agencies. These investigations led to the discovery of hundreds of Chinese tourists who were illegally hired by MCC International, IPI’s contractor, to perform the construction work at the hotel project.
The now-defunct Tinian Dynasty provided an economic boost for Tinian. Just the same, it had its own share of problems before it went bankrupt and shut down last year. US regulators fined Tinian Dynasty $75 million for “willful and egregious” lapses in its anti-money laundering protocols.
Saipan’s Independent Rep. Edwin K. Propst and community activist and businessman Glen Hunter are among the most vocal critics of the casino project. They have aggressively been using the social media platform to call out on local officials, who they said have been turning a blind eye and giving IPI free passes for requirements it fails to meet. Their Facebook posts have become the most active venue for public discussions on casino on Saipan.
IPI said the casino industry “is a very heavily regulated industry” and that the company “will continue to fulfil all statutory requirements of applicable local and federal US laws and regulations.”
But Propst alleged that IPI has violated many laws since it opened the Best Sunshine Live, its temporary gaming and casino training facility at T Galleria-Saipan in 2015. IPI has shut down the Sunshine location following its move to the permanent location at the resort hotel.
Propst cited Public Law 18-56, the casino law that sets the requirements for gaming licensing on Saipan. The law provides "the applicant who is granted an exclusive license under this chapter shall make an initial investment of at least $2 billion, to include a casino and a resort with a minimum of 2,000 guest rooms. The purchase of an existing hotel shall not be included in satisfying the requirement of building 2,000 rooms.”
Propst said IPI falls short on the requirements. The Imperial Pacific Resort will include 400 guestrooms, 15 villas, 11 restaurants and a shopping mall. The casino part has more than 200 gaming tables and over 350 slot machines. As of December 2016, IPI had invested $343 million in the hotel construction. The Imperial Pacific Resort occupies an area of 59,000 square meters based on IPI’s 25-year lease agreement with Department of Public Lands.
Hunter, for his part, slammed the CNMI government for not imposing a casino or gross gaming revenue tax. “The GGRT is different from the business gross revenue tax, which all of the businesses, ours included, in the CNMI pay the government,” said Hunter, who owns and operates The Shack, a local restaurant-bar on Saipan.
“Every country or jurisdiction that has a casino collects GGRT. That’s why I’m wondering why the CNMI government does not impose it here. The public needs to know that BGRT is different from GGRT. The first one is paid by all businesses here in the CNMI while the other one is for casino revenue tax,” he added.
Administration officials said additional taxes would eventually be levied on IPI, but it must be given the chance to first establish its investment. House Vice Speaker Rep. Janet U. Maratita has introduced House Bill 20-31 that would establish fair taxes for the gaming industry and impose a 5-percent tax on all gaming revenues. “The exclusive license fee that is paid currently is arguably a fair price for a legal monopoly, but even an entity that enjoys exclusive gaming rights should be paying their affair share of taxes,” she said.
Hunter, however, considers 5 percent too insignificant compared to the worth of IPI’s operations. Last year, IPI reportedly earned close to $1 billion in revenues. “The taxes go to the government and the Legislature decides where to put the money. There would be known negative impacts, in social and infrastructure, when the casino industry was allowed here.”
A separate casino tax or GGRT, Hunter said, could mitigate those known negative impacts. “The casino is generating revenues but no GGRT is being collected. Macau has imposed over 30 percent in casino taxes, but why does the government allow and condone this?”
With help from other concerned members of the community, Hunter is drafting a casino tax initiative to be included on the ballot for next year’s elections. “We’re planning to launch the signature campaign very soon. We’re just drafting the petition, making sure it is legally correct and properly written. We plan to have a proper casino tax and we would bypass the government and let the people decide.”
Fighting negative publicity is challenge for a much-maligned industry. But IPI claims to be “a responsible corporate entity,” that is “committed toward the economic development of the CNMI. In an exclusive statement to the Pacific Island Times, IPI also said, “as the largest private sector employer in CNMI, (IPI) will continue to respond to the needs of the community it serves by providing for meaningful employment opportunities.”
The first phase of the project alone is estimated to generate 3,500 jobs, IPI said. “At all times, IPI prioritizes local hire and extending the recruitment to those within the CNMI and mainland United States for suitable positions. These hiring efforts will complement and support IPI's contract workers that are also essential to IPI's operation.
The nightmarish traffic and parking situation surrounding the casino is another story. IPI said it “will continue to encourage its valued visitors and guests to refrain from parking at other nearby establishments. For its staff and valued guests and visitors, IPR- Saipan provides free shuttle and valet service. IPI is also working toward completing additional parking spaces for its valued visitors and guests soon.”
While IPI seeks to cater more to tourists, the threat of gambling addition in the local community is the main concern for the anti-casino crowd.
The Office of Gov. Ralph Torres is awaiting results of a survey that will gather baseline data to help determine if a further comprehensive screening tool is needed to assess gambling in the CNMI. The survey is a collaborative effort between the Commonwealth Casino Commission and Imperial Pacific International and the Substance Abuse & Rehabilitation Program under the Office of the Governor.
Yvette Sablan, the rehabilitation program’s special assistant, said collecting a sizeable and diverse sample from the population is needed “to determine next steps for policy development and treatment services.” The survey is expected to be completed in September.