After IPI disaster, CNMI looks to igaming

The Commonwealth of the Northern Mariana Islands (CNMI) is currently revising its approach to gaming regulation, contemplating the dissolution of its gaming commission. With an eye toward modernizing its gaming landscape, the CNMI is considering a shift towards iGaming and sports betting as potential avenues for economic revitalization.

On February 4, CNMI Representative Ralph N. Yumul disclosed to Marianas Variety that a legislative committee is currently assessing the 2014 statutes that legalized gaming and established the Commonwealth Casino Commission (CCC). If the proposed changes are enacted, regulatory powers would be transferred to the lottery commission, effectively rendering the CCC defunct. Yumul expressed concerns about the CCC’s inability to function effectively, largely due to its dependence on a single licensee, Imperial Pacific International (IPI), whose operational history has been marred by significant challenges and controversies.

The Rise and Fall of Imperial Pacific International

To understand the present state of the CNMI gaming industry, it is essential to examine the tumultuous journey of Imperial Pacific International. A decade ago, IPI made headlines with the launch of its temporary casino, Best Sunshine Live, located in the T-Galleria shopping mall on Saipan, the largest island in the CNMI. Initially, IPI achieved remarkable financial success, boasting revenues comparable to those of Macau.

However, the introduction of its long-anticipated permanent resort in Garapan, initially opened amid great fanfare in 2017, marked the beginning of a downward spiral. Below is a detailed timeline outlining key developments:

2014: Establishment of the Commonwealth Casino Commission

• Legislators create the CCC to regulate the fledgling gaming industry, aiming to benefit the entire CNMI through well-regulated casino gaming that would boost tourism and government revenues.
• The CNMI Lottery Commission grants an exclusive gaming license to IPI, setting the stage for its future ventures.

2015: The Golden Era of Best Sunshine Live

• Best Sunshine Live opens, quickly gaining recognition for its VIP gaming turnover, which rivaled that of top establishments in Macau. Former CEO Mark Brown noted astonishing figures, with rolling-chip programs reportedly achieving $1.6 billion in a single month.
• The company breaks ground on a permanent resort intended to feature luxury amenities, including marble floors and elaborate sculptures. However, construction is soon disrupted by Typhoon Soudelor, a significant natural disaster.

2017: The Unveiling of Imperial Pacific Palace

• The grand opening of the resort, formerly known as Grand Mariana, showcases impressive yet incomplete facilities. Over time, the venue’s promise would give way to criticism and disappointment.

2018: Natural Disasters and Management Turmoil

• Super-Typhoon Yutu strikes, exacerbating the already precarious construction timeline and resulting in leadership changes within IPI.

2019: Legal Troubles Surface

• Three IPI executives face federal charges, including racketeering and money laundering, in connection with unlawful employment practices. The fallout is profound, as IPI accumulates $2 billion in player debt, ultimately writing off two-thirds of this amount.

2020: The COVID-19 Pandemic Hits

• With the onset of the pandemic, IPI’s Imperial Pacific Palace closes in March, causing yearly revenue to plummet from $412 million in 2018 to just $3.1 million.

2021: Regulatory Strain

• The CCC escalates its scrutiny of IPI, filing multiple complaints for failing to meet its financial obligations, including annual licensing fees and community contributions. The commission ultimately suspends IPI’s gaming license.

2022: Decline and Bankruptcy

• After two years of closure, IPI resorts to auctioning off assets, including gaming equipment, to address outstanding debts. The unfinished resort earns critical coverage, described as “contrived grandeur” now devolving into desolation.

2023: The Current Crisis

• Imperial Pacific Palace remains closed, with reports highlighting its deteriorating condition and significant repair costs potentially reaching $150 million. The CCC has ceased operations, laying off staff amidst financial constraints.

Looking Ahead: Embracing iGaming

With the CCC in a state of flux and significant public sentiment shifting away from traditional brick-and-mortar casinos, Yumul highlights the potential for internet gaming as a viable alternative. Lawmakers are now exploring legislation to establish a regulated online gaming environment, including sports betting, inspired by successful iGaming models observed in select US states.

The CNMI’s pivot towards iGaming reflects a broader trend in the gambling industry, where digital platforms are increasingly recognized for their capacity to drive revenue and engagement in changing consumer landscapes. This shift not only aligns with the preferences of CNMI residents but also positions the territory to capitalize on emerging global gaming markets.

As CNMI contemplates the future of its gaming framework, the focus remains on establishing a sustainable, innovative, and lucrative gaming ecosystem. The challenges faced by IPI serve as critical lessons that will inform the territory’s move towards a regulated iGaming industry, ultimately aiming to fulfill its economic ambitions in a contemporary context.