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.
"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 email@example.com or 702-477-3871.