By Bryan Manabat
Saipan—The silence of the once loud and vibrant casino gaming complex on Saipan is as deafening as the noise created by legal battles. The Imperial Pacific Palace Casino Resort’s contrived grandeur has waned, replaced by desolation.
Its assets, including the gaming equipment, are now being auctioned to comply with the creditors’ demand for payment.
Once touted as the CNMI’s economic salvation, the casino developer, Imperial Pacific International (CNMI), said it invested $3.14 billion in the CNMI in 2014 for the development of the now-abandoned complex after it was awarded an exclusive license to operate the casino. Collections from license fees were earmarked for the government’s crumbling pension plan for retirees and their survivors.
But Imperial Pacific International has dug its grave. It was wrought with controversies, including forced labor and human trafficking charges filed against its subcontractors. It owes millions to the Commonwealth Casino Commission, employees who remain unpaid and other creditors. Considered the biggest investment in the Pacific region, the Saipan casino has been under federal scrutiny from the moment of its conception.
The Covid-19 pandemic caused Imperial Pacific to shut down, resulting in its revenues plummeting from $412 million in 2018 to $3.1 million in 2020. The remaining construction work on the unfinished portions of the hotel complex has since been suspended.
CNMI Rep. Edwin Propst, one of the most vocal critics of the casino, said Imperial Pacific was a failed experiment. "Yes, their license must be revoked. We need to put an end to the failed monopoly license agreement and consider multiple licenses. Monopolies benefit no one," he said. “I also think we should give our people the ability to vote on whether or not they want casinos here on Saipan.”
ADVERTISEMENT
Several provisions of the 2014 casino license agreement are now invalid.
But the company is not ready to throw in the towel, according to a high-ranking executive who requested anonymity.
The executive told the Pacific Island Times that shareholders are aggressively looking for investors and other means of financing to settle other lawsuits and catch up with payroll.
Last year, Inside Gaming Asia reported that the criminalization of cross-border gaming in China resulted in the inclusion of Saipan in blacklisted tourist destinations.
The Imperial Pacific executive said the CNMI’s gaming industry needed a new approach to making it sustainable. "The plan is to raise more capital, settle with all creditors and the Commonwealth Casino Commission and reopen as soon as possible," the executive said.
A March 2022 report by Imperial Pacific Internal Holdings, IPI’s Hong Kong-headquartered parent company, reflected an unabated optimism despite the court battles. The report stated that an additional $34 million has been invested in the design and construction of the resort “which has brought the total investment to approximately $913 million by the end of 2020.” IPI Holdings was banking on the CNMI’s tourism recovery. “The U.S. government has also approved reincluding Hong Kong in the CNMI visa waiver program,” the report stated.
Imperial Pacific has settled a number of lawsuits. The casino commission has petitioned the CNMI Superior Court to enforce its decision to suspend Imperial Pacific’s gaming license for failure to pay the annual license and regulatory fees. The regulatory agency wanted the court to declare Imperial Pacific incompliant with the commission’s order. The agency is seeking payment of $25 million in annual license and regulatory fees.
Previously, Imperial Pacific sought a review of CCC’s decision. At the same time, the gaming company asked the court to determine whether the pandemic constitutes a natural disaster or force majeure, which it said hindered its ability to meet its obligations.
In March, the court affirmed the commission’s order and dismissed IPI’s administrative appeal.
In May, the federal court in the CNMI granted Imperial Pacific’s plea for a temporary restraining order that halted the commission’s scheduled hearing on the revocation of the casino developer’s exclusive casino license.
ADVERTISEMENT
Imperial Pacific told the federal court that it was anticipating $150 million in new financing from the Korea-based IH Group that would allow it to satisfy its creditors, resume operations and restart construction. However, the anticipated capital infusion did not materialize.
Sources told the Pacific Island Times that some financiers wanted the full majority operating shares of Imperial Pacific, a proposal declined by Imperial Pacific.
Later, the federal court granted Imperial Pacific’s request to allow arbitration in its dispute with the casino commission regarding their casino license agreement and the casino developer’s force majeure defense.
Gov. Ralph DLG Torres said he was not familiar with the process related to Imperial Pacific’s negotiation with potential investors regarding capital infusion.
"CCC has moved for revocation and it's now in the court,” Torres said at a press briefing hosted by KKMP 92.1 on Oct. 21. “Unfortunately, with the pandemic and zero tourists, they need to pay the regulatory fees,” the governor said. “Really, it’s like a perfect storm.”
Subscribe to
our digital
monthly edition