Tuesday, March 30, 2010

Las Vegas Sands in Trouble Over Chinese Mob Ties?

Today's Sun caught a hidden bombshell of a Reuters report on Las Vegas Sands' business in Macau. While most of the Macau controversy lately has centered around MGM Mirage having to leave New Jersey over that state's regulators decrying its joint venture with Pansy Ho, until recently hardly a peep had been said over Las Vegas Sands and its heavy ties to Macau gaming (with Sheldon Adelson even proclaiming that his company is now "an Asian company doing some business in America"!)... Until now.

At first, the men had been ordered to break the arms and legs of a dealer at Sands Macau suspected of helping a patron cheat millions of dollars from the business. Later, a call went out to murder the dealer, court records show. But then one of the gangsters balked and reported the plans to authorities.

The plot's mastermind, according to testimony in previously undisclosed court transcripts obtained by Reuters, was Cheung Chi-tai. At trial a witness identified Cheung as a leader of the Wo Hop To -- one of the organized crime groups in the region known as triads. Another witness, a senior inspector with the Hong Kong police called to testify because he is an expert on the triads, identified Cheung by name as someone who would commit crimes for money. Cheung's organized crime affiliation was corroborated in interviews for this article with law enforcement and security officials intimately familiar with the gaming industry in Macau.

The murder-for-hire case sheds light on the links between China's secretive triad societies and Macau's booming gambling industry. It also raises potentially troubling questions about one of the world's largest gaming companies, Las Vegas Sands, which plans to open a $5.5 billion Singapore casino resort in late April.

Cheung was not just named as a triad member but also, according to a regular casino patron testifying in the trial, "the person in charge" of one of the VIP rooms at the Sands Macau, the first of three casinos run here by Las Vegas Sands. In addition, Cheung has been a major investor in the Neptune Group, a publicly traded company involved in casino junkets -- the middlemen who bring wealthy clients to Macau's gambling halls. Documents show that his investment allowed him a share in the profits from a VIP gambling room at the casino.

An examination of Hong Kong court records, U.S. depositions from the former president of Sands, and interviews with law enforcement and security officials in both the U.S. and Macau, reveals a connection between Las Vegas Sands and Cheung -- ties that could potentially put Sands in violation of Nevada gaming laws.

Donde los yikes??!! This isn't looking too pretty... But does this really mean legal problems for Las Vegas Sands in the near future? And nasty consequences for their American operations? We don't know yet.

U.S. casinos operating in Macau are all headquartered in Nevada and must comply with that state's laws which prohibit "unsuitable" associations that "discredit" its gaming industry. Those laws are meant to keep organized crime figures out of the casinos. [...]

Randall Sayre, a member of the Nevada Gaming Control Board that monitors casino compliance, declined to comment specifically on Sands Macau, writing in an email that the state "takes no public position on suitability ... without a full investigative work-up."

A gaming official, who insisted upon anonymity, said: "This relationship (with Cheung) would be of concern to Nevada authorities. You're talking about direct ties to bad guys." Another said the agency is monitoring the situation.

However, we do know for sure that Macau's gaming industry today operates in a more "Old Las Vegas" way than we do in Las Vegas! The mob may no longer play a major role in gaming here, but it still does there... Even if they have a lower profile today due to major multinational corporations like Las Vegas Sands, Wynn Resorts, and MGM Mirage coming to town and running big casinos. This lower profile helps keep Macau from looking "too gritty" to scare away tourists, and has recently helped LVS, Wynn, and MGM in staying on good terms with most US gaming regulators (even if New Jersey is getting tougher on them)... But does this change things?

Legally, it may not. Like it or not, Stanley Ho still has a strong grip on Macau, the triads (Chinese mafia) do as well, and any gaming companies doing business in Macau (like Las Vegas Sands and MGM Mirage) will sooner or later be involved with Stanley Ho and the triads.

However, this may very well shake up American politics this year. Remember when Floyd Brown attempted to make hay over Dubai World's 50% stake in CityCenter and (unsuccessfully) turn it into a political hot potato for Harry Reid and MGM Mirage? Well, this new LVS Macau development will make sure this backfires on Republicans, as we know how much the teabaggers hate "socialism" and "communism"... And they probably won't like the fact that LVS CEO Sheldon Adelson has been donating heavily to Suzy Lowdown's Senate campaign. So when will we start hearing the teabaggers calling on Ms. Suzy to return all of Sheldon Adelson's Communist-tinged donations?

Again, I don't see this as a very big deal so long as these gaming companies aren't participating in any crimes with the triads... But if the Republicans keep trying to turn this into a campaign issue to beat Harry Reid over, they'd better expect some serious blowback.

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