CCC stops issuance of junket licenses

The Commonwealth Casino Commission board has issued an order prohibiting the issuance of new or renewal licenses for junket operations at the Imperial Pacific International (CNMI) LLC, pending a CCC review of the regulations governing the junket program.

In the same Commission Order 2021-003 that the board adopted during its monthly meeting last Thursday, CCC board chair Edward C. DeLeon Guerrero directed CCC executive director Andrew Yeom not to process any applications for junket licenses.

Junket refers to an arrangement between a casino and a tour operator to facilitate a period of gambling by one, or a group of players, to the casino.

DeLeon Guerrero ordered Yeom to contact the three current junket licensees and determine whether they wish to surrender their licenses due to IPI’s present lack of gaming activity.

The order takes effect 10 days after its publication in the Commonwealth Register.

DeLeon Guerrero said IPI’s gaming has temporarily ceased and junket activity by licensed junket operators has also stopped accordingly.

DeLeon Guerrero said only eight licenses remain valid, all of which will expire per their own terms before Oct. 1, 2022.

In a letter dated April 8, 2021, Gov. Ralph DLG Torres raised concerns about the junket program—presently authorized by Part 2600 of the regulations—and asked CCC to revisit this provision of the regulations, repeal this allowance for junket operator licenses, and enact safeguards and penalties to ensure that the operations of IPI do not permit junket activities within the casino under the CCC’s regulatory authority.

The chairman said CCC has determined that a comprehensive review of the junket program is warranted and no licenses under the present program should be renewed, nor new licenses issued until the comprehensive review has occurred, and new regulations that address Torres’ concerns are promulgated.

At the meeting, DeLeon Guerrero said the junket program came later in CCC’s operation because every regulatory training that CCC members initially attended at the University of Nevada or anti-money laundering workshops have always recommended no junket operations in the CNMI.

“So that was already preset by us and we did not include it in our initial regulations,” he said.

When CCC started out a few months into operation, IPI approached the commission, requesting if they could entertain the junket program, DeLeon Guerrero said, and they listened to both sides of the story about how important the junket program is to any casino operations.

“We understand that it is critical that we have people who function as a kind of a glorified travel agent, where you get out and get all the different VIP players to make them aware of the Commonwealth and then arrange their travel for them to come in here,” DeLeon Guerrero said.

He said the commission appreciates that the junkets do play a role in reducing IPI’s direct accounts receivable on the VIP program because it allows the junket operator to be guarantor of those credits. However, he said, they have been very disappointed in IPI’s performance with this junket program because, since the departure of then-IPI’s chief executive officer Mark Brown, and subsequently the departure of Chuck McDonald, who was then manager of compliance, no one at IPI had any knowledge or any interest in doing anything with junkets.

“We pleaded with different groups at IPI, saying we already licensed all these people. You have to designate someone that they can work with. No one was interested,” DeLeon Guerrero said.

He said they found that “very disappointing and very frustrating” since it was IPI that originally almost begged CCC for the junket program to be implemented and then, in the end, no one wanted to touch it.

At that point, he said, they got the April 8 letter from Torres. He said Torres got a lot of pressure from the Saipan Chamber of Commerce and various groups in the community that they are also aware of how junkets are illegal in mainland China and Hong Kong.

“It basically says that all of the current junkets really are illegal,” he said, adding it doesn’t make sense for this junket program to continue at this time.

DeLeon Guerrero said they have received comments and recommendations that the junket operation is a threat to the CNMI’s tourism industry, particularly since there are a lot of Chinese tourists in the CNMI. “There is a fear that the Chinese government will put the CNMI government on the blacklist of countries that are not approved for destination,” he said.

The chairman disclosed that they were actually reluctant to entertain any junket application from China and that the only way that they proceeded was they worked with IPI’s then-consultant, a former Internal Revenue Service supervisor, and a former FinCen prosecutor, which also at the time was an IPI’s adviser.

“Together with the CCC, we formulated the policy for the Bank Secrecy Act, the anti-money laundering, and we required each of these junket operators to comply and adopt the anti-money laundering,” he said.

DeLeon Guerrero said it was the only way that they can entertain the program because they could not investigate anybody in China.