MGM Mirage Chairman Terry Lanni is confident his company’s joint venture in Macau with a controversial Chinese businesswoman will be approved by New Jersey gaming authorities, even though one Wall Street analyst believes the casino operator will dump its vast Atlantic City real estate holdings if the partnership is rejected.

Gaming regulators in Nevada and Mississippi have approved MGM Mirage’s 50-50 partnership with Pansy Ho in the $1.1 billion MGM Grand Macau, which is scheduled to open by the end of the year.

MGM Grand Macau : May 2007 

New Jersey’s Division of Gaming Enforcement is investigating the relationship between MGM Mirage and Ho, the daughter of 84-year-old Chinese billionaire Stanley Ho. The elder Ho has fought allegations for years that his Macau casinos have been involved with organized crime triads engaged in money laundering, loan sharking, drug trafficking and prostitution.

The enforcement division is expected to file a report with the New Jersey Casino Control Commission this summer. If any issues are raised, the commission will schedule a public hearing on the matter.

Nevada gaming authorities, both the Gaming Control Board and the Nevada Gaming Commission, unanimously approved the partnership between MGM Mirage and Pansy Ho, deeming the Chinese businesswoman to be independent from her father.

“We had unanimous approval after a one-year investigation by Mississippi and unanimous approval after a two-year investigation by Nevada,” Lanni said Thursday. “I am convinced we will be approved in New Jersey.”

Lanni wouldn’t comment directly on an investors note, published Monday by UBS gaming analyst Robin Farley, who predicted MGM Mirage will exit Atlantic City if the state finds Pansy Ho an unsuitable business partner.

“I’m not going to elaborate any further,” he said.

MGM Mirage owns a 50 percent share in the Borgata with Boyd Gaming Corp., which operates the Atlantic City hotel-casino. In addition to the land it owns that is part of the Borgata site, MGM Mirage has an adjacent 71-acre parcel that is expected to house a company-owned hotel-casino project.

Farley said Macau is a much more valuable business opportunity than Atlantic City.

“If forced to choose between Macau and the Atlantic City joint ventures, Macau seems to offer higher returns on capital and overall revenue growth potential,” Farley said. “If Pansy Ho is not found suitable, MGM Mirage could sell its New Jersey gaming operations to proceed with its Macau joint venture. New Jersey doesn’t limit its number of operators, leaving the door open for MGM Mirage to re-enter at a future point.”

If MGM Mirage were to bail on Atlantic City, Boyd Gaming would have the right of first refusal to pick up the other half of the Borgata. MGM Mirage could also hold on to its undeveloped Atlantic City real estate.

Lanni said the company is spending between $16 million and $20 million in preliminary design work for a hotel-casino to be built on the 71 acres next to the Borgata. He said MGM Mirage hopes to bring those plans to state officials early next year for preliminary approval.

Farley said a rejection of Pansy Ho by New Jersey authorities would all but kill that new hotel-casino project and be detrimental to the New Jersey gaming community.

“The bottom line is MGM Mirage is one of the few entities that have invested heavily in the Atlantic City market and the company has an outstanding reputation,” Farley said. “We believe any issues with MGM Mirage’s Macau partner can be resolved.”

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