Three Las Vegas casino corporations that are interested in expanding into Toronto have been the subject of allegations of corruption and bribery involving their dealings in Macau, China – issues that will be weighed by Ontario licensing authorities deciding who can operate in the province.
The companies have denied the allegations, which are unproven and arise mostly in U.S. jurisdictions. However, Toronto casino opponents are raising questions about the Chinese operations in a bid to sway councillors preparing to vote on allowing a downtown resort. By law, Ontario regulators can deny a gambling licence if there are "reasonable grounds" to believe that a casino company's track record, in any jurisdiction, suggests it would not act with "integrity, honesty, or in the public interest."
MGM Resorts International, which has publicized its proposal for a casino-resort at Exhibition Place, halted business in Atlantic City after regulators accused it of cultivating partners tied to Asian organized crime. Las Vegas Sands Corp., which hopes to build a casino at the Metro Toronto Convention Centre, is under investigation for potential violations of the U.S. Foreign Corrupt Practises Act. Wynn Resorts Ltd., another potential Toronto bidder that secured a licence in China, is being investigated by the U.S. Security and Exchange Commission over a $135-million donation it made to a Macau university.
Adam Vaughan, a downtown councillor who opposes a casino development, says municipal politicians are getting too much promotional literature and not enough information on the bidders' regulatory issues relating to Macau.
"Are the companies appropriately competing for a casino in Ontario? Do they have the regulatory clearance to even bid on a casino in Ontario?" he said in an interview.
Once formal bids are submitted to the Ontario Lottery and Gaming Corporation, the Alcohol and Gaming Commission decides whether casino directors, senior managers and major shareholders meet the requisite ethical standards. "We would be contacting other jurisdictions to see if there are any issues that might preclude the applicant from being issued a registration," said Lisa Murray, a commission spokeswoman.
Macau, a former Portuguese colony, now rakes in six times more than Las Vegas in gambling revenue – about $40-billion (U.S.) a year. It opened up to foreign investment a decade ago.
In 2009, New Jersey state regulators put MGM Resorts' Chinese expansion under a microscope after its spinoff MGM China unit enlisted Pansy Ho as its local partner. She is the daughter of Chinese-Canadian casino magnate Stanley Ho, who is celebrated as "The King of Gambling" for turning Macau into a global destination and has been alleged to have a relationship with Hong Kong's triads, according to a report released by New Jersey state regulators. Mr. Ho has denied the allegations.
"MGM's conduct evidences a willingness to seek partnerships with persons it knew to be associated with or alleged to be associated with organized crime," the regulators said in the report, as it deemed the Ho family "unsuitable" partners for any company that wished to operate a casino in the state.
MGM – which now gets about 30 per cent of its revenues from China – ceased operation in Atlantic City, but is lobbying to get back in.
MGM disagrees with New Jersey, and says the MGM China partnership is a non-issue. "Ms. Ho has no interest in, nor involvement in our activities in Toronto," spokesman Alan Feldman said in an e-mail.
Other potential Toronto bidders also face hurdles.
On March 1, Las Vegas Sands advised in a financial disclosure that its auditors had uncovered some likely "bookkeeping" violations of the U.S. Foreign Corrupt Practises Act related to Macau amid an ongoing probe of its activities there by the U.S. Department of Justice and the SEC.
The scrutiny was sparked by a wrongful-dismissal lawsuit, still ongoing. In 2010, the fired past president of Las Vegas Sands China, Steven Jacobs, claimed his bosses urged him to keep quiet about "junkets, triads, and government investigations" related to Macau.
He claimed in his lawsuit that the corporation's billionaire owner, Sheldon Adelson, urged him to conduct "secret investigations" of Macau officials for negative information that "could be used to exert 'leverage' in order to thwart government regulations and/or initiatives viewed as adverse." The Sands and Mr. Adelson are countersuing for libel.
Denying the allegations, a company spokesman said the Sands is an open book. "The industry is heavily regulated and we maintain a relationship with our regulators so they are aware of everything we are doing," Ron Reese said.
Wynn Resorts has also said it would like to be in on a Toronto casino, although it has floated no concrete plans. A $135-million donation it made to the University of Macau has exposed it to at least six lawsuits and an SEC probe.
Wynn says it is "vigorously defending" itself against lawsuits related to the donation.