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Nov. 06, 2008
Copyright © Las Vegas Review-Journal

Dubai World seen as suitable partner

State gaming commission to decide whether entity can work as ally with MGM Mirage

By HOWARD STUTZ
REVIEW-JOURNAL

Terry Lanni
Chairman of MGM Mirage, which seeks to make Dubai World its business partner



Dubai World Chief Executive Officer Christopher O'Donnell speaks Wednesday during the Nevada Gaming Control Board's hearing.
Photo by Gary Thompson.

Nevada gaming regulators said Wednesday that Dubai World, the investment arm of the Persian Gulf state, was a suitable business partner for casino giant MGM Mirage.

The entity, which has an asset base worth more than $100 billion and had revenues of almost $11 billion in 2007, has already made a substantial investment in MGM Mirage. Dubai World paid $5.1 billion last year to acquire 9.4 percent of MGM Mirage and 50 percent ownership in the massive $9.1 billion CityCenter development.

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    • "I'm supporting this application because I see two entities in front of us that benefit each other," Gaming Control Board Chairman Dennis Neilander said following a 90-minute hearing.

    Control Board member Randy Sayre said he met with federal regulators as part of the Dubai World investigation. Sayre said federal authorities had no concerns that would preclude Dubai World from investing in the Nevada-based gaming operator.

    Control Board member Mark Clayton said the strategic alliance between MGM Mirage and Dubai World created a new type of partnership that did not require any changes in state gaming regulations.

    Still, because of Dubai World's corporate structure, which is governed by the emirate's laws and regulations, gaming regulators asked that Dubai World Chairman Sultan Ahmed Bin Sulayem and Chief Financial Officer Maryam Sharaf file routine gaming license applications with the state. It was unlikely, however, the agency would conduct a full scale licensing investigation.

    Attorney Ellen Whittimore said Dubai World officials would file the applications within 90 days.

    The Nevada Gaming Commission will rule on the MGM Mirage-Dubai World relationship on Nov. 20.

    The hearing allowed Dubai World officials to discuss their numerous investments, developments and partnerships, including joint ventures with Atlantis developer Kerzner Holdings International, which is building a similar resort in Dubai, and New York billionaire Donald Trump, who is developing a hotel and condominium tower in the growing Emirate.

    The joint venture with MGM Mirage was an arrangement that Dubai World CEO Christopher O'Donnell said would be a long-term agreement.

    "It was reflective of both quality and opportunity," O'Donnell said. "Dubai World has been looking to invest in Las Vegas and Nevada."

    The agreement with MGM Mirage allows Dubai World to purchase up to 20 percent of the casino operator's outstanding shares. Michigan gaming regulators, however, have ruled that Dubai World can only purchase a little less than 15 percent of MGM Mirage.

    O'Donnell wouldn't discuss any additional stock purchases after the hearing.

    "One of the great things about today was we got an unanimous resolution of the board members," O'Donnell said. "It's inappropriate for me to make any comments at this point other than we are absolutely delighted with the outcome and the process we've been through with the Nevada gaming authority."

    Dubai World paid $80 a share for its stake in MGM Mirage and has watched MGM Mirage's stock price slip roughly 82 percent this year. Shares of the casino operator closed at $15.99 on the New York Stock Exchange Wednesday, up $1.18, or 7.97 percent.

    Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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    Sinister wrote on November 07, 2008 12:14 AM: It is typical of the MGM/Mirage to have this RagHeads in our country after the part they played in 911. Greed will be the down fall of America driven by companies like the MGM.


    Carroll wrote on November 06, 2008 07:41 PM: the glitzy shine has worn & the carpet is looking shabby... VIVA LAS VEGAS & her grind joints... the smoke filled, dark dins with no clocks, no signs to the parking lot

    welcome DUBAI WORLD, suckers!


    tw wrote on November 06, 2008 12:28 PM: Rules do not apply for those with money.

    Scumbag Gaming Control Board


    Leric Goodman wrote on November 06, 2008 11:08 AM: This story illustrates the difference between Nevada's regulation of Gaming and the ideology of "let the market regulate itself" which has caused such a huge economic mess.

    Nevada regulates the suitability of investors in Gaming operations.

    Nevada makes sure that the Gaming operators can pay off their bets if they should lose.

    By contrast, Wall Street was left free of regulation in key sectors, so no one made sure that counterparties were either suitable or could pay off their bets if they lost. The result of laissez faire was a huge mess. All sorts of games no one understood were being played, but the losers could not pay off, the "winners" were left with worthless paper promises for their money, and the tsunamis from this are still wreaking devastation on our economy.

    Nevada has expertise that the nation (and the world) could use in implementing a regulatory scheme which will prevent this sort of thing from happening in the future without stifling the development or the operation of markets.


    Joe Bama wrote on November 06, 2008 11:03 AM: I imagine it was either Dubai World or pay somebody to tear down what has already been constructed. BO can always use the empty rooms to house his Kenyan relatives which is probably everybody in Kenya by now


















    patriot wrote on November 06, 2008 09:29 AM: WHAT DO YOU MEAN THEY HAD NO CHOICE, I WAS UNDER THE OPINION THEY WERE SUPPOSE TO BE IMPARTIAL.BUT HEY I GUESS MONEY IS THE ONLY THING THAT MATTERS ISNT IT, FREEDOM TAKE A BACK SEAT


    Fred T. wrote on November 06, 2008 04:57 AM: It's obvious that the gaming commission had no choice, because to turn Dubai down would put City Center flat on its face. It's not like there is a lot of money available. Didn't I read that Dubai will be getting a guaranteed 10-15% return on their investment, despite the fall in the MGM shares from the purchase price of $80 to $15? You have to wonder who will be buying/renting all those condos, too. Time will tell, but this deal smells shaky...