Weak economy sparks moves to legalize casinos

Island Business
PACIFIC UPDATE: Weak economy sparks moves to legalize casinos

With the Commonwealth of the Northern Mariana Islands’ (CNMI) economy going from worse to worst or from a government budget of over $200 million just a few years back to only $102 million in the next fiscal year, “everything is now on the table including casinos on Saipan,” officials said. CNMI Governor Benigno R. Fitial told senators for the first time to “keep an open mind” on allowing casino gambling on Saipan, the capital island of CNMI.  The CNMI Senate last year killed a Saipan casino bill the CNMI House of Representatives had passed. Senate President Paul Manglona (Ind-Rota) said if a new Saipan casino bill was put to a vote today, the Senate would kill it again. He and other senators from Rota and Tinian where voters approved casino gambling on their islands said they remained firm on their stand to “let the people of Saipan decide on casino gambling”. Saipan voters had already twice rejected an initiative allowing casino gambling on their island. The last vote on the issue was in 2007.

Former governor and now representative Froilan Tenorio said there’s no other type of investment on Saipan that will generate revenue to revive the CNMI economy as casinos, although the impacts won’t be felt until a few years after casino operations finally get off the ground. He said investments and revenues from Saipan casino operations will be in the hundreds of millions in the years to come, and will benefit not only Saipan but the entire CNMI. The CNMI totally lost its once almighty garment industry in 2009 because of the liberalization of the world trade rules. This left the CNMI with only one economic engine—tourism—but arrivals have also been on a dive because of a decline in the economy of its major tourism market of Japan. Proponents of Saipan casino said there have been a lot of changes that have occurred since 2007, including a worse economy, pay-less paydays and 16-hour work cut in government bi-weekly that could convince people to approve casino gambling on Saipan. But those who oppose gambling legalization on Saipan said the ill-effects of such facilities on the island far outweigh the projected revenue from the industry, including problems on gambling addiction, criminality, prostitution and turning off a segment of tourists.

Former representative Tina Sablan said there are still a lot of options to improve the economy, one of which is growing CNMI’s remaining industry—tourism. House minority leader Diego Benavente (R-Saipan), a former lieutenant governor and former speaker, said such a major decision to allow casino gambling on Saipan should rest with voters. Better yet, he said, instead of passing a pending casino bill, lawmakers who want to allow casinos on Saipan should instead introduce an initiative. To-date, no one has come forward. He said he’s aware that the economy has worsen from the last time voters rejected a Saipan casino initiative and some people could argue that people will now be more open to the idea of a casino industry here. “So why not allow voters to decide?” he said. Tenorio, whose Saipan casino bill was killed by the Senate last year, said there have been casino investors eying Saipan as their base rather than Rota and Tinian, primarily because of Saipan’s infrastructure including an international airport with direct and connecting flights to Asia and the Pacific, hotels, golf courses, and other more modern amenities coupled with its tropical paradise setting.

Tinian, Rota experience

The 13-year old Tinian Dynasty Hotel and Casino on Tinian has yet to make real profit. It has drastically reduced its operations, including its casino floor size, because international gamblers have not been coming in.  Shortly after Tinian Dynasty Hotel and Casino’s grand opening in April 1998, came the Asian economic crisis, followed by the September 11, 2001 terrorist attacks, SARS scare and a plethora of external and internal factors; the latest of which include the federalization of CNMI immigration and uncertainty whether CNMI could still continue to attract Asian tourists in the months ahead.

Some of the hotel and casino workers have also been complaining of delayed wages, but the management said they are doing all they can to make timely payroll.  Despite the Tinian Dynasty’s failure to recoup its investment on its 13th year, other investor groups have come in with their plans to also put up casinos on Tinian. This other CNMI island was the launching pad for US military planes carrying the atomic bombs that were dropped on Japan’s Hiroshima and Nagasaki during World War II.  Bridge Investment Group went the farthest with the construction of employee housing, only to be halted because of federalization issues that forced its contractor’s mostly Chinese workers to pack up and leave CNMI.

After hibernating, Bridge Investment vowed early this year that it will pursue its $50 million casino and condominium project on Tinian. Just recently, it was able to see a new investment partner that’s willing to pour in additional $70 million in casino and other developments. Neo Gold Wings Paradise Casino & Hotel also told the CNMI government it is pursuing its abandoned Tinian casino project, this time with a planned investment of $1.6 billion compared to a prior amount of $1.2 billion. The investor said it will pay over $100,000 in unpaid land leases and will make a one-year advance payment of land lease as required by a new Department of Public Lands policy. But DPL and Neo Gold Wings have yet to agree on new lease terms and conditions.

Another casino investor leasing public land on Tinian, Marianas Resource Development Corp., is so far making timely land lease payments but has yet to start construction of its $300 million casino project on Tinian.  On the island of Rota, only Rota Treasure Island Casino has so far remained as the lone casino operator on the island but it remained temporarily closed due to renovation and lack of clients especially after the March 11 disasters in Japan.  Another investor, SNM Corp. which owns Rota Resort and Country Club, is also willing to invest in a casino. It paid a $150,000 investigation fee to start the process of applying for a conditional casino license.  And while Saipan’s casino gambling has yet to be legalized, Pohnpei in the Federated States of Micronesia turned to members of the CNMI House of Representatives in October 2010 for guidance and information as Pohnpei courts an investor planning to build a 1,000-room casino and golf resort. Moreover, investors interested in setting up casinos have yet to reveal themselves although they have been telling lawmakers about investments of up to $300 million.  Investors are still facing major hurdles because unless the Constitution is changed through initiative or law, casino gambling remains illegal on Saipan.

Knowing that the Senate will kill any Saipan casino bill, Rep. Stanley Torres (Ind-Saipan) pre-filed the first “local bill” in CNMI history that seeks to authorize and establish casino gambling in a senatorial district. A local bill needs only the approval of the majority of a delegation’s members before going to the governor for signing. Unlike a House or Senate bill, a local bill does not need to pass both houses of the Legislature.  Article 21 of the CNMI Constitution prohibits gambling in the CNMI “except as provided by the commonwealth law or established through initiative in the commonwealth or in any senatorial district.” Torres said once signed into local law, his local bill, albeit affecting the Third Senatorial District or Saipan, “is in fact a Commonwealth law.”

Other members disagree.  This early, lawmakers like Benavente (R-Saipan) said Torres’ proposal is not allowed by the constitution because they said a local law is not a commonwealth law. Rep. Ray Tebuteb (R-Saipan), chairman of the Saipan and Northern Islands Legislative Delegation, expects the local bill to spark constitutional debate which has already started.

– By Haidee V. Eugenio

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