Regulators use 'velvet glove' in Cannery deal

Jan 27, 2009 5:05 PM
Gaming Insider by Phil Hevener |

Nevada gaming control is not what it used to be. Some of the teeth have been pulled. Attitudes have lost their sharp edge.

Have regulators decided appearances do not matter as much as they once did?

The final approval by the Gaming Commission last week of Australia’s Crown Ltd and its chairman James Packer as the new owner of Las Vegas-based Cannery Resorts provided a lot of food for thought on the subject. All that stands in the way of completing this $1.75 billion deal is Pennsylvania’s approval. Cannery’s Meadows racino with some 4,000 slots is located near Pittsburgh.

The fact Packer is in business on Macau with Lawrence Ho, the 31-year-old son of controversial casino boss Stanley Ho, did not warrant a tough question during public hearings from either the Gaming Control Board or Commission.

Welcome, to Nevada, Mr. Packer. Oh, and did you say the $1.75 billion you’re paying for Cannery is a CASH deal?

This seemed to put a smile on the face of Gaming Commission Chairman Peter Bernhard who noted, according to a news account, "It is nice to see someone come here with cash."

Cash deals wash away some of the worry associated with doing business in a market where casinos, big and small, now devote considerable energy to cutting jobs and costs while they also scramble to borrow the money no one seems to be lending.

Packer pretty much had his way as far as the state review of the Cannery deal is concerned. He did stop by for a brief meet-and-greet at the Control Board meeting Jan. 7, but was absent from the Commission meeting.

Compare the velvet glove treatment given the Packer-Lawrence Ho issue with the thorough public review given Lawrence’s sister Pansy Ho two years ago when she was before the same two bodies because of MGM’s plans for a joint venture resort project with Pansy in Macau.

Go figure.

Some things don’t seem to warrant the emotional energy they once did. This may be due in part to the fact New Jersey officials have been mostly quiet on the subject of Stanley Ho giving his two heirs apparent top jobs in companies that the controversial "godfather" of Macau gambling pretty much created.

New Jersey authorities did not blink an eye – not publicly, anyway – in response to MGM’s deal with Pansy Ho. Oh, there have been a lot of unofficial references to behind -the-scenes grumbling and raised eyebrows at the prospect of Stanley Ho’s daughter being found suitable to have anything to do with a casino involving a New Jersey licensee. The Division of Gaming Enforcement even has a supposedly explosive report kicking around somewhere, but it appears to be gathering dust in someone’s desk drawer.

There’s probably widespread reluctance to taking action that would encourage MGM to pack up and leave the state.

And there is probably a similar reluctance to taking a metaphorical ax to the $1.75 billion Cannery deal. It’s nice to have shiny principles within easy reach, but no one wants to do something stupid.

Not during times like these, times when every measure of casino industry health is on the decline.

The one Nevada regulator who was said to be ready for Packer with some tough questions about Lawrence may have been persuaded to take the view that there is no reason for Nevada authorities to work up a public sweat if New Jersey sees no reason to ask the tough questions about relationships that might make a difference when there are billion-dollar deals on the table.

Why sink a multi-billion-dollar deal that promises to create jobs and generate lots of tax funds?

As for Pennsylvania, it is easy to imagine gaming regulators there agreeing they will not press the relationship issues if no one else does. Gaming is a very politicized creation in that state.

The situation reminds me of Harrah’s CEO Gary Loveman conceding several months ago that the company was necessarily reducing its maintenance spending, but since other companies were doing the same thing he guessed that Harrah’s would probably not lose significant ground. In other words, stay competitive but do not do more than is necessary because extra cash is very scarce these days.

Some questions are always asked and answered behind closed doors, but the public handling of Packer’s application has me longing for the old days when there was a good deal more transparency.