‘Suit seeks to reassert Tinian casino commission’s independence, power’

The Tinian Casino Gaming Control Commission filed a lawsuit on Monday in an effort to reassert its independence and power to effectively regulate casino gaming on Tinian. The lawsuit asks the CNMI Superior Court to declare that recent local laws enacted by the Tinian Legislative Delegation attempted to amend the Tinian Casino Gaming Act in ways that would impair the power of the Gaming Commission to oversee gaming on Tinian and are either invalid or unconstitutional.

“The Tinian Gaming Act was designed to give to its commissioners independence from political interference and influence,” said Robert O’Connor, the legal counsel for the TCGCC and the author of the Gaming Act back in 1987. “That is why the Act gave the commissioners high salaries, limited each of them to one six-year term, and protected them from being fired or removed during their tenure. We wanted independent commissioners free from political pressures. Commissioners do not need campaign contributions for their next campaign. What is happening now is applicants for licenses and licensees who cannot convince the commission on the merits of their proposal are instead going to the elected representatives on Tinian and asking them to use the legislative process to force through changes the commission feels are unwise or inappropriate. Their recent Budget Act even attempts to tell the commissioners how much to pay each employee, whether to give them raises or not, and how much to pay their executive director. This is an indirect way to try and influence commission behavior.”

According to the complaint filed Monday, “…the Tinian Local Delegation has undermined the authority and the ability of the Tinian Casino Gaming Control Commission to effectively regulate casino gaming on Tinian, both directly, by interfering with the internal workings of the commission, and indirectly, by implicitly setting itself up as a rival power center to which those dissatisfied with the policies of the commission may appeal. It is essential to effective gambling control on Tinian that gambling be regulated by an independent party free from political concerns.”

One result of the undermining of the commission, according to O’Connor and officials of the commission, is that the Tinian Dynasty Hotel & Casino is currently in noncompliance with the Gaming Act to such an extent that Deloitte & Touche has been unable to complete a required annual audit of its financial situation. The audit was due last July.

“Local laws passed by the Tinian Local Delegation are directly responsible for this noncompliance,” said O’Connor. “They passed laws changing the tax structure by taxing premium players at a 5-percent rate instead of the Gaming Act’s 12-percent rate without properly defining premium players or gross revenue, and a local law to allow gambling on credit without properly providing for how to trace back who got credit and whether they paid their debt. Now the commission’s efforts to solve these noncompliance issues by forcing the casino to properly manage itself is being resisted by the casino who has hired lobbyists, including relatives of local legislators, to try and force the commission to approve agreements and issue licenses to applicants before these mismanagement issues are resolved, even though those agreements are in blatant violation of the Gaming Act.”

At last Wednesday’s commission meeting the present unlicensed operators of the Tinian Dynasty, who took over the casino without first gaining commission approval as required by the Act, pushed the commission to approve a new Operating Agreement which would have allowed the present licensee of the casino, Hong Kong Entertainment (Overseas) Investments Ltd., to sublease all of its assets, including the hotel and casino and the casino license to a newly formed company, Tinian Entertainment Company.

The commission refused, pointing out that the assets that were to be subleased were presently subject to a federal criminal forfeiture action, and assisting in the transfer of those assets to another entity could be construed as obstructing the prosecution of that case. The commission pointed out that the proposed agreement violated the Gaming Act in numerous ways, including a provision that would have allowed the casino owners to simply “assign” the interest in the hotel and casino to any nominee of their choice for $1. The commission explained how no gaming jurisdiction could possibly approve such an agreement allowing a casino license to be sold for $1 to just anyone, including persons who might have unsavory backgrounds. The commission insisted as a condition to considering any license sale or sublease that the casino first come into compliance by having outside managers come into the casino and find out what is happening to the gaming revenues being collected and getting that collection and accounting into compliance with the Act.

“We need local politicians to let the commission do its job,” said OConnor. “Right now applicants and licensees run to the mayor or the delegation instead of dealing with the commission, and this is undermining the commission’s ability to do its job. It is the reason really why the casino is noncompliant and has resisted coming into compliance. This is resulting in the loss of enormous amounts of revenue for the residents if Tinian and is jeopardizing jobs. We want the gaming industry to respect Tinian as a well regulated jurisdiction and that is not going to happen if that industry does not learn that this political interference has been halted.” (PR)