Saipan casino may sound death knell for Tinian resort

Published in: Latest Intelligence

Saipan’s decision to legalize casinos on the island comes amid a surge in interest in gaming in the Northern Marianas and elsewhere in the Pacific, but may come at the expense of an existing resort on neighbouring Tinian, experts say.

A lot of the interest is coming from Macau junket operators eager to secure an alternative gaming destination to the world’s biggest gambling hub, said Ben Lee, managing partner at IGamiX Management & Consulting Ltd.

Two big groups with ties to the Macau gaming industry have applied for a Saipan license -- Best Sunshine International Ltd., a subsidiary of Hong Kong-listed First Natural Foods Holdings Ltd. and Mega Stars Overseas Ltd. Both paid a $1 million application fee by the March deadline.

Mega Stars Overseas Ltd. is the owner of the Tinian Dynasty Hotel & Casino, the only casino currently operating in the Northern Marianas.

Whoever gets approved will have to make an investment of $2 billion and build at the minimum a 2,000-room casino-hotel.

Records from the CNMI Department of Commerce showed that Mega Stars registered as Marianas Stars Entertainment Inc. Marianas Stars is 25 percent owned by Mega Stars Overseas Ltd. and 75 percent by Famous Treasure Limited, a company incorporated in the British Virgin Islands and a wholly owned subsidiary of Chinese Strategic Holdings Ltd.

Best Sunshine, on the other hand, has not registered in the CNMI just yet. No records on this business entity were filed in the CNMI Department of Commerce.

Lee said both are junket operators in Macau, adding that there has been growing interest in exploring overseas markets from the sector.  

“Even others have gone as far as Western Samoa and Vanuatu,” says Lee.

The decision to legalize casinos on Saipan came from the government’s need to boost tourism revenue to help close a pension-funding shortfall.

According to the Marianas Visitors Authority, visitor arrivals in March this year were 40,666, very little changed compared to 40,613 in March, 2013.

Japan remains as the biggest tourist market for the Northern Marianas with 13,396, followed closely by China, 12,359 and South Korea with 10,732 visitors.

Lee said he sees considerable potential in the CNMI, but the right conditions may need to be put in place to pull in the tourist dollar.

“The CNMI has always had potential. It is just a matter of making sure conditions are in place to let those casinos prosper.”

Key among these, says Lee, is the ability to rely on an “air bridge,” a direct flight, or charter flight from any major Asian destination. Currently, the Tinian International Airport is not ready to receive international flights pending rehabilitation of its terminal.

Tinian is 2,115 miles away from Hong Kong, 1,475 miles away from Tokyo and 1,931 miles from Seoul.

He also underscores the importance of making sure gaming revenue tax is low.

“The environment has to be conducive to the operation of junket businesses,” adds Lee.

While the outlook may be bright on Saipan, Lee said any resort there was likely to prosper at the expense of Tinian’s existing casino.

“It is my opinion, my personal and professional opinion, that casinos are not viable in Tinian,” says Lee. “With a casino on Saipan, why would anyone want to go to Tinian? Tinian is a dream long gone.”

The problem is a lack of a critical mass of attractions in and on the island to draw in a reasonable volume to ensure success, as well as difficulties in access from Saipan.

Saipan is the second-largest island in the Marianas chain after Guam, with 44.55 square miles in land area followed by Tinian with 39 square miles.

Based on the 2010 Census, of the total Northern Marianas population of 53,883, about 48,220 were on Saipan, 3,316 on Tinian and 2,527 on Rota. Tinian’s population, moreover, is concentrated at the southern end as the U.S. military leases two-thirds, or 15,353 acres of the island. Major shopping centers are on Saipan.

At present, there is only one local airline – Star Marianas Air-- plying the Saipan-Tinian route. Arctic Circle Air has temporarily suspended flights to Tinian pending repair of its Britten-Norman aircraft in the Philippines. Freedom Air, on the other hand, which has been serving the islands for the last 40 years, is currently going through bankruptcy proceedings on Guam. The Tinian local government has been looking into the possibility of bringing back the ferry service.

Meanwhile, Tinian Mayor Ramon M. Dela Cruz agreed with Lee over the need to diversify attractions to lure more tourists and casino aficionados.

Dela Cruz said; “In order to make the casino industry successful on Tinian, a lot of amenities have to be in place.”

He acknowledged that transportation remains the biggest challenge and the Tinian leadership is looking to the central government for support.

“Sad to say, things are moving very slow,” said Dela Cruz pertaining to the government’s action in resolving the transportation issue.

He also said the future of the casino industry on the island will also depend on government support. “Direct transportation is a problem and until such time that this remains unresolved, it is going to hurt the industry.”

With the three Northern Mariana islands battling against each other for a piece of the gambling pie, the mayor is still upbeat that the Tinian casino industry will survive if there are direct flights from major Asian destinations.

For the mayor, direct flights to Tinian will give them a level playing field with Saipan. “We have no problem with competition,” he said.

The Dynasty casino on Tinian has been open since 1998, but has never made a profit. Despite that, the Tinian senate issued four more licenses which have not progressed beyond the inking of agreements, Lee previously said in a newspaper interview.

Rota also issued its own gaming license which saw a small casino open and shut after just three months. Rota has yet to revive its casino operation.

Meanwhile, as the Northern Marianas continue to vet the two applicants for an exclusive casino license, another South Pacific destination is opening a casino operation soon.

According to the Fiji Sun, construction of a $290 million casino is underway on Denaru Island. A single-storey casino building will rise on 17-acres of land.

Its developer, One Hundred Sands Limited, is upbeat that following the completion of the geo-tech work, the project is back on track.

The casino operation in Fiji touts 400-500 in employment opportunities.