S**t hits MGM, Sands fan

Local newspapers — and bloggers — have been slow to pick up on a couple of Reuters dispatches that show — as some doomsayers prognosticated — that involvement in Macao is coming back to bite the U.S. casino industry in the butt. Specifically, the Nevada Gaming Control Board is developing “investigative product” on the relationship between Sands Macao and the alleged triad kingpin Cheung Chi-tai. Regulators in Pennsylvania, meanwhile, will neither confirm nor deny that they’re looking into the triad matter but that the suitability of operators is under “ongoing” scrutiny. (I’ll take that as a “yes.”)

Sheldon Adelson may get off with a few fines — and might even been gift-wrapped an excuse to unload turkey Sands Bethlehem and take a huge writedown thereupon. It looks considerably worse for MGM Mirage. Midwestern regulators are shocked — shocked! — by the findings of the New Jersey Division of Gaming Enforcement; namely, that Stanley Ho is mobbed up. (Don’t everybody fall over at once.) As a consequence, Illinois is opening an investigation, while Michigan and Mississippi regulators are spending some quality time with the NJ DGE report.

That this should have to be done at all reflects poorly on the initial due diligence of these states. Nevada, meanwhile, stands by its finding of suitability in re Pansy Ho … as well it might, having taken a far less cursory attitude toward the MGM/Pansy Ho/Stanley Ho relationship than did Mississippi. The latter was so quick to give its blessing it looked careless at the time, not merely in retrospect.

A domino-like series of investigations could be catastrophic for MGM, which looked like it could heave a sigh of relief now that CityCenter was completed and the Atlantic City vs. Macao dilemma resolved. However, it’s now at risk of losing its half of Illinois’ highest-grossing riverboat (Grand Victoria), all of Detroit‘s best performer (stately MGM Grand Detroit), its Gold Strike Tunica — OK, maybe not such a big loss — and Beau Rivage … should a perfect-storm regulatory scenario come to pass. With all the preoccupation on CityCenter, its adversities, its cost, its financing, who’d have thought it would be MGM Grand Macau that would threaten to shred the company’s portfolio?