2 apply for Saipan casino license

Two investor groups submitted applications to exclusively develop a casino resort on Saipan, along with bank proof of wire transfer of $1 million each in nonrefundable application fee on the deadline date yesterday. This comes seven years after Saipan voters rejected for the second time a casino question on the ballot and only a few weeks after passage and enactment of a controversial Saipan casino gaming legislation.

Gov. Eloy S. Inos’ promise of restoring the 25-percent cut in retirees’ pension within 90 days from March 21 is now a step closer to reality, with the initial payment of $30 million in casino license fee due by May 5.

Press secretary Angel Demapan said the two applications received are from Marianas Stars Entertainment Inc. and Best Sunshine International Ltd.

“It’s a good day for the Commonwealth,” Demapan told reporters in an impromptu news briefing past 4:30pm yesterday at the governor’s office building on Capital Hill.

Although the administration has yet to disclose any information about the two investors, including where they are based, sources said they are likely from Hong Kong.

The governor, in a statement, said the total deposit of $2 million “confirms the viability of the proposal to spur economic development through a highly regulated development plan.”

Inos said this development is “not just about casinos” but also about construction of new hotels, expansion of infrastructure, and the creation of thousands of jobs.

“The issue that is the most appealing is that it will provide an economic future for many families, increased demand for real property, and many business opportunities for local residents. We will be closely reviewing these applications to ensure that they meet our objectives and protect the long-term interest of our residents,” Inos said.

When the governor convened his Cabinet yesterday morning, no application for a Saipan casino license had been received yet. But by 4:30pm, the administration announced receiving two applications.

Senate President Ralph Torres (R-Saipan) said yesterday he was initially hoping that “three or four” investors will participate in the application process.

“But I am happy that we have at least two. This will lead to economic activities. We can now better address the issues before us,” he said.

Torres said that based on the names of the applicants released yesterday, they were not the ones that lawmakers met with in Hong Kong months ago.

What’s next?

Demapan said the submission of the applications and the accompanying funds is the first step in the casino development process as identified in Public Law 18-38.

The next step, he said, is for the deposit of $30 million in escrow by May 5, and the Lottery Commission’s approval or denial of the applications by June 19.

The application requirements were quite extensive and required applicants to submit detailed information concerning their financial capability, experience in gaming, development plan, and a three-year business plan.

Demapan said the Lottery Commission will promptly and thoroughly review the applications submitted.

The Lottery Commission consists of the attorney general, the Finance secretary, the Commerce secretary, and the Public Safety commissioner.

These individuals will also call on experts in the field of hotel development, tourism, law enforcement, and gaming to assist in evaluating the applications.

Public contribution

Demapan said one of the key things that the Lottery Commission will also be reviewing is the investors’ “public contribution” plan.

“The public contribution is going to play a major role because we like to see in what ways, significantly, can the community benefit from this investment,” he said.

Demapan, in an interview, said the fact that there’s more than one submission “is proof that there’s an interest for this industry.”

“It’s the hope of this administration that this industry will thrive and produce the benefits that we were hoping for when we pushed for this proposal because we did this solely for the benefit of restoring retirees’ [pension] cuts, of giving interest payments to active members, and the ultimate goal is when the business gross receipt tax starts rolling in to help households with their LEAC payments,” Demapan said.

LEAC stands for levelized energy adjustment clause, one of the two components of a Commonwealth Utilities Corp. customer’s bill primarily for fuel expenses. The other component is the non-fuel expenses. The administration will use portions of casino revenues to help reduce CUC customers’ utility rates.

Casino Commission appointees

The administration’s receipt of two applications came four days after the governor appointed three individuals from Saipan to the Commonwealth Casino Regulatory Commission, which is separate from the Lottery Commission.

Inos appointed to the Casino Commission former senator Maria Frica T. Pangelinan, businessman David C. Sablan, and former Commonwealth Healthcare Corp. chief financial officer Alvaro A. Santos on April 17.

The three appointments are subject to the Saipan and Northern Islands Legislative Delegation’s advice and consent.

The Tinian and Rota mayors also have to appoint a member from their islands subject to their respective legislative delegation’s advice and consent.

In an interview after his Cabinet meeting yesterday, the governor said when it became clear that he was looking for candidates for Casino Commission members, Pangelinan, Sablan, and Santos “expressed their interest.”

Inos said from his standpoint, the three are “very qualified,” and with lots of business and finance experience.

“Like I said, they expressed interest. I was looking for folks who would do a good job. They all have business degrees and they’re prequalified, I should say, and I’m happy with those folks,” the governor added.

Each commission member will be paid $40,000 for the first year of the commission’s existence.

After the first year, they will be compensated at $20 an hour for official commission meetings attended.

The commission will promulgate rules and regulations as may be necessary to fulfill the law’s intent, policies, and purposes.

The commission’s regulatory jurisdiction is confined to casinos licensed under Public Law 18-43, which amended the law on casino gaming on Saipan. House floor leader Ralph Demapan (Cov-Saipan) is the main author of the casino bill, along with Rep. Felicidad Ogumoro (R-Saipan).

It’s the Lottery Commission, though, that has the discretion to grant an exclusive casino license on Saipan, not the Casino Commission.

An investor granted a license to exclusively operate a casino on Saipan is required to build a hotel-resort with at least 2,000 rooms and an initial investment of $2 billion.

For decades, casino gaming was legal only on Tinian and Rota. It was only on March 21 this year that a bill became law allowing casino gaming also on Saipan.

Right now, the only operating casino in the CNMI is the Tinian Dynasty Hotel & Casino, now owned by Hong Kong-based Mega Stars Overseas Ltd.