Imperial Pacific’s end of control over Saipan casino market deemed unconstitutional

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Posted: January 4, 2022, 8:57 a.m.

Last update: January 4, 2022, 9:21 a.m.

Imperial Pacific International (IPI) continues to retain its monopoly in the Saipan casino market through Imperial Palace Casino. This could continue, as a senior official now claims that removing this control would be unconstitutional.

Saipan Imperial Palace
The Saipan Imperial Palace continues to struggle. Lawmakers want to allow more casino licensing through a new bill, which is now ruled unconstitutional. (Image: South China Morning Post)

Not too long ago, Andrew Yeom, the executive director of the Commonwealth Casino Commission (CCC), wanted to see an end to IPI’s reign. Just over a year ago, he was pushing for the company’s casino license to be suspended.

IPI has repeatedly managed to avoid losing its grip on Saipan, and now that lawmakers are considering increasing the number of casinos there, it has done so once again. Yeom has apparently softened his stance, according to Variety of the Marianas. He told lawmakers this week that the bill allowing additional casinos could not go forward.

Yeom had previously filed at least five complaints early last year against the IPI for repeated breaches of its obligations to the Commonwealth of the Northern Mariana Islands (CNMI). Now, Yeom argues, “We can’t have a local bill trying to override a Commonwealth law.”

IPI still owes millions of dollars to government and private entities. He was appointed receiver last year to sell assets to cover his debts, but was able to avoid the sale because he miraculously found around $2 million to cover one of his unpaid bills.

The bills keep piling up

The IPI owes the government at least US$38.6 million. He failed to pay his royalty last August, which was worth $15.5 million. It also failed to pay its regulatory fees in October, which amounted to US$3.1 million.

The operator also failed to make US$20 million in community benefit fund contributions in 2018 and 2019. These contributions were included in the license agreement it was issued to operate the Imperial Palace.

Additionally, a judge had ordered IPI to set aside $2 billion in capital as a guarantee that it would be able to make future payments. That too was not done.

IPI is also in the process of settling several outstanding invoices worth a few million dollars. None of these financial obligations are likely to be met, as the Imperial Palace remains closed. IPI’s license was suspended in April last year and is still suspended. This and COVID-19 reduced casino revenue to zero.

Lawmakers try to dissolve a monopoly

In November of last year, after years of dealing with repeated IPI issues, CNMI lawmakers attempted to correct a mistake. They realized that giving IPI a monopoly was a mistake and introduced Local Bill 22-26.

The legislation was written specifically to end operator control. It reads, in part, “The current situation, where the exclusive licensee of the casino has been unable to pay taxes and, more importantly, cannot reliably pay the $15 million guaranteed license fee , demonstrates that it was unwise for the Commonwealth to rely solely on one industry and one company.

The bill adds that, as a result of the oversight, and to “achieve the goal of increased stability and reliability, the government must remove its unique licensing framework” and expand the market.

The IPI is fighting the bill and attempts to defeat it, despite having no money or proper leadership to keep it afloat.

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