From 1 up to 5

Citing the need to secure a source of funding for the 25% portion of the retirees’ pensions and anticipating the revocation of the exclusive Saipan casino license of the struggling Imperial Pacific International (CNMI) LLC, House floor leader Ralph N. Yumul (R-Saipan) has introduced a local bill that will increase the number of casino licenses on Saipan from one to five.

Yumul’s House Local Bill 22-26 seeks to authorize, establish, and regulate casino gambling within the Third Senatorial District, the political name of Saipan and the Northern Islands.

In a phone interview yesterday, Yumul said the whole intent of his bill right now is to increase the number of casino licenses, but he is not sure what his colleagues in the Saipan and Northern Islands Legislative Delegation would like to see. He said he just upped the number to five licenses because both Rota and Tinian have the same allowed number of casino licenses.

“I know five may be too much for the island. We’re looking at pretty much starting all over again, basically, in preparation of the revocation of [IPI’s] casino license,” Yumul said.

He said the whole intent is basically to help the retirees.

He said the whole Saipan casino license agreement in the original Public Law 18-56 “obviously didn’t work” so the proposal during the House Gaming Committee meeting in the coming months is to decide on what to do with the Saipan casino industry.

Yumul

“I’m not sure what other members would put in or change, but at least I laid on the table [an option on] how we’re going to go about the casino industry in the future,” Yumul said.

When asked if there is a conflict of interest in his introduction of the bill since his brother, Ray, is the interim IPI chief executive officer, Yumul said the House legal counsel informed him that there is no conflict in introducing the bill because they are just trying to increase the number of casino licenses.

“Should any conflict of interest arises, then I may not have to vote during the voting period,” he said.

Yumul said they’re just preparing should the revocation of IPI’s license happen and that they should be prepared to either restart the casino industry or to kill the industry.

“That’s for the Gaming Committee to hold public hearings and get the sentiment of the people as to how we want to go about the future of the gaming industry here in the CNMI,” he said.

For now, Yumul said, they’re anticipating a revocation down the road as the U.S. District Court for the NMI has a firm grip on the casino and its property. “So we anticipate a revocation down the road,” he said.

Yumul said if IPI’s license is not revoked, then obviously they can’t move forward with his bill.

He said he will introduce the bill in the House of Representatives session tomorrow, Friday, and then it will be transmitted to the SNILD, which is the lawmaking body for all Saipan and the Northern Islands matters.

Yumul said they are prepared to re-examine the gaming industry and check the sentiment of people—if they want to continue with the gaming industry or not allow future gaming in the CNMI.

Yumul stated in the bill, called the Saipan and Northern Islands Casino Act of 2021, that the casino industry, which was established seven years ago to provide revenue to help the CNMI retirees and their pensions, is struggling. He said for the sake of the retirees, SNILD must take action to ensure a more reliable and diversified funding source.

He said the Commonwealth is responsible to pay for 75% of government retirees’ benefits, as outlined in the settlement agreement that was reached in the Betty Johnson case against the government.

The law that created the casino industry on Saipan, Public Law 18-56, addressed the 25% shortfall by using IPI’s $15 million casino exclusive license fee as a source. Yumul said this arrangement worked until Public Law 20-10 replaced this source with the Casino Gross Revenue Tax for the pension benefits of government retirees.

He said the Casino Gross Revenue Tax, which relied upon actual incoming revenue, is inconsistent and now, with the COVID-19 pandemic, this revenue is clearly insufficient to cover the 25% portion of pension benefits for all the Commonwealth’s retirees.

In the present situation, Yumul said, IPI has not been able to pay taxes and cannot reliably pay the $15 million guaranteed license fee, which demonstrates that it was imprudent for the Commonwealth to rely on just one industry and just one company.

He said tying the fate of the retirees’ pension to one single industry was risky and that it was even more dangerous to tie the funding for the retirees’ pension to an exclusive licensee.

To better provide for the retirees and obtain the goal of increased stability and dependability, they must move away from the current single licensee framework that is totally dependent on one business entity, Yumul said.

He said the purpose of this bill is to mandate that the casino operating in the Third Senatorial District will provide license fees to pay the 25% portion of pension benefits to all the retirees in the Third Senatorial District and lessen reliance on the funds generated from the Casino Gross Revenue Tax.

He said consistent with the original intent of P.L. 18-46, to accomplish the goal of making the funding source for retiree pensions more reliable, SNILD will not repeat past mistakes by offering an exclusive local license.

Yumul said that, by increasing the number of locally licensed casinos, there will be more economic support for the industry as the casinos can compete but still work together, sharing costs and expenses for promoting the industry and bringing in tourists for the benefit of not just Saipan but the entire CNMI.

Also, by increasing the number of licenses from one to five while simultaneously requiring annual license fees of not $15 million but $3 million, there will be less risk for all concerned, he said.

He said assuming five local casinos pay a reasonable sum of $5 million each, this will result in $25 million—which is $10 million more than what is being presently required by P. L. 18-56.

He said significantly, IPI has strongly indicated that it cannot or will not be paying its $15 million annual license fee in full, its annual $3 million regulatory fee to the Commonwealth Casino Commission, nor does it intend to pay its community benefit obligation.

He said a well-regulated casino industry will increase tourism to Saipan and the Commonwealth, will stimulate the local economy, and provide critically needed government revenues.

As a result, Yumul said, retirees will have a more reliable and consistent funding source for their pensions.

The bill will also establish a Saipan-Northern Islands Casino Commission within the Office of the Mayor of Saipan. The commission will have the power and authority to, among other things, issue and impose license and other fees, and issue and enforce administrative orders.

The commission shall impose a non-refundable $200,000 casino license application fee for all casino developments; and impose an annual license fee of $3 million, to be adjusted every five years.