OVER a month since the controversial fee-hike measure became law, the House Gaming Committee on Friday met with an official of an e-gaming business establishment to discuss a possible “amicable” solution.
“We’re not the ogres that some people think we are,” the committee chairman, Rep. Edwin Propst, told MP Holdings general manager Bart Jackson.
“We’re not here in bad faith,” Propst added. “We’re not here to try to shut you down or run you out of town…. We did not have sinister thoughts behind it,” referring to the Saipan delegation’s unanimous passage of the fee-hike bill that became Saipan Local Law 22-6 after Gov. Ralph DLG Torres signed it on Aug. 2, 2021.
“We move forward through discussion and dialogue,” Propst said, “and we can do it amicably without…any anger and animosity. I hope we can continue forward in that direction.”
Jackson, for his part, thanked Propst and his committee “for this opportunity to meet. We believe in constructive conversations, constructive discussion…. We all know the kind of challenges the Commonwealth is having now as a result of the pandemic and we want to be part of the solution. We want to work with you to help make things better. We understand your challenges and I think that there is an accommodation where we can be helpful. And I apologize for any previous misunderstanding that we’ve had. These things happen in the heat of the moment.”
“Absolutely,” Propst replied.
“I really appreciate the opportunity to speak with you all,” Jackson added, “and look forward to speaking with you again very soon.”
Also attending the committee meeting were MP Holdings consultant Gus Noble, attorney Mike Dotts and some e-gaming establishment employees.
With Propst were committee vice chair Tina Sablan and members Vicente Camacho and Rep. Celina Babauta.
Positive development
The committee meeting was held a day after Superior Court Associate Judge Kenneth Govendo conducted a hearing on the e-gaming operators’ motion for a temporary restraining order against the CNMI government over Saipan Local Law 22-6, which doubled the electronic gaming license fee.
Before passing the measure, the delegation, chaired by Senate Floor Leader Vinnie F. Sablan, neither assigned it to a committee for review nor conducted a public hearing.
The e-gaming operators said they learned about it only after the governor signed it into law. S.L.L. 22-6 states that it takes effect upon becoming law.
The new law would force them to shut down, the e-gaming operators said, adding that their 70 employees would lose their jobs.
The e-gaming operators’ lawyer, Michael Dotts, said Judge Govendo was “very pleased” to see a letter from Rep. Edwin Propst inviting MP Holdings to a committee meeting.
The judge viewed Propst’s invitation letter as a “positive development” that could “lead to a solution between the parties rather than the court being forced to decide.”
Dotts said the judge told the parties that the court would take the matter under advisement, “hoping there would be a solution in the Legislature.”
Financial records
During the meeting on Friday, Rep. Tina Sablan asked Jackson about MP Holdings’ relationship with Bridge Capital, which she said was granted by the CNMI government a qualifying certificate that provides tax rebates and abatements to qualified investors.
Bridge Capital received its QC in 2006 for investing $12 million in the CNMI.
Sablan said the QC prohibits the beneficiary from operating a gambling business.
Jackson said Bridge Capital and MP Holdings have the same shareholders, but they are “completely different companies.”
He said he reports directly to Bridge Capital executives, but added that “there is no co-mingling of funds, the accounts are separate, the books are separate, everything is separate.”
He said Bridge Capital has nothing to do with MP Holdings, adding that there is no indication “that there is any kind of overlap relative to this issue.”
Sablan reminded him that he was under oath.
“Absolutely,” Jackson replied.
According to Sablan, “there were discrepancies identified in [the] financial records submitted to the court by MP Holdings — between the records you provided the court and the records that [the Division of Revenue and Taxation] has on file. Could you explain those discrepancies?”
After briefly consulting with attorney Mike Dotts, Jackson said:
“In my testimony to the court yesterday, I explained…that the financials were reporting on different issues; that the financials that the government was using were financials which have been submitted from the property level for the purpose of license renewal, and that the other returns were an overall MP Holdings returns. So for example…in a company like Caesars World, [which has] casinos all over the world, if they had a casino in Mississippi and they were renewing a license in Mississippi they would submit certain financials which relate to the specifics of that venue. If they would not be reporting on the parent company financials then they wouldn’t include things potentially like…real estate or loans or some levels of depreciation.”
Sablan then asked Jackson, “Would you be willing to provide this committee with all of those financial records to help us better understand and reconcile those discrepancies?”
“We would be willing to share some financials in private,” he replied.
Sablan also asked Jackson if he could provide the committee a list of all LLCs or limited liability companies associated with Bridge Capital or its principals.
“If you’ll give me list of specifics you are looking for, I will do my best. We will check and try to comply,” Jackson said.
‘We want to help’
In his remarks prior to the question-and-answer portion of the meeting, Jackson reiterated that S.L.L. 22-6 will force them to close their doors and put their 70 local workers out of job. The CNMI Treasury will lose millions of dollars, he added.
The local law is supposed to “generate new revenue” for the CNMI government.
“My goal today is to share the financial dynamics of our industry and provide some understanding of how our businesses work,” Jackson told the committee.
“We want to help you make the most informed decision. MP Holdings LLC first entered the e-gaming industry in 2016 with the purchase of Club 88. In 2018, we opened Saipan Vegas. To the outsider, the industry looks easy and extremely profitable. Unfortunately that is far from reality,” he said.
“If it were profitable why are there only two venues remaining?” he asked. He noted that Club C in the Kanoa Resort had to close due to slow play prior to the Covid-19 pandemic. “They have been losing money for years when they closed,” he said.
He added that Imperial Pacific International, with over 50% of its floor space dedicated to electronic gambling, “apparently suffered the same fate.”
Jackson said Saipan Vegas and Club 88 are the last two remaining e-gaming venues on Saipan.
He said MP Holdings is a contributing member of the community. “Every year, the company gives away thousands and thousands of dollars to the community charities in need of assistance. The challenges of the past 18 months are not lost on us,” he added.
“We know that the community is hurting. We know that the Legislature is looking for help finding solutions to the CNMI’s problems. We want to help, but we cannot help if we cannot survive. We want to be part of the solution and not part of the problem. With your understanding and cooperation, we are confident we can find a workable accommodation that can help you raise additional funding and allow MP Holdings to remain in business,” Jackson said.
MP Holdings LL General Manager Bart Jackson answers questions from members of the House Gaming Committee on Friday.
House Gaming Committee Chairman Edwin Propst speaks during a meeting on Friday.
Rep. Vicente Camacho listens during a House Gaming Committee meeting on Friday.
