When regulators forced MGM Mirage to choose between investments in Atlantic City and Macau, the Chinese gambling enclave won.
In a report made public Wednesday, New Jersey casino regulators accused Macau's gambling baron Stanley Ho of engaging in organized crime involving gangs--virtually labeling him a mobster. Ho, who boasts a net worth of $2 billion, held a monopoly over casinos in Macau until 2002 and still controls 20 of the 33 in operation. He has denied allegations like these though he has never been formally charged with any crime.
Officials who enforce New Jersey's gaming laws presented MGM--controlled by 92-year-old billionaire Kirk Kerkorian--with an ultimatum. The gambling giant could either cut off ties with Ho's daughter Pansy, with whom it runs a casino in Macau, or sell its 50% stake in Atlantic City's highest-grossing property. (The other half is owned by Boyd Gaming Corporation ( BYD - news - people ).)
It was a drama that tested allegiances. MGM opted to keep its ties to China and the Ho family and jettison its current and future interests in New Jersey. Arranging to put its share of the Borgata Hotel Casino & Spa into a trust until it is bought, it also scrapped plans for another $5 billion casino on Atlantic City's boardwalk.
MGM is following the money: Atlantic City's revenue plummeted 16% between February 2008 and February 2009; its 11 casinos won $262 million in February. Meanwhile, Macau gambling revenue surged 70% over the same period, totaling $1.8 billion last month.
Further cementing MGM Mirage ( MGM - news - people )'s faith in Chinese gamblers to keep spending is its plan to launch an IPO for its Macau assets (the ones shared with Pansy Ho) in August or September of this year. That's following in the footsteps of fellow billionaires Steve Wynn's Wynn Resorts and Sheldon Adelson's Las Vegas Sands ( LVS - news - people ), which raised billions last year in share sales for Wynn Macau and Sands China, respectively.
MGM made a move freighted with significance about where the future of the gaming industry lies. Now which American billionaire will join Ho--who was just released from the hospital after half-a-year's stay--to rule Macau?
Source: Forbes, Hana R. Alberts