According to a WSJ report, MGM Mirage has decided to sell its interest in the Borgata and presumably close the door on any future developments in Atlantic City:

For years, New Jersey regulators have raised concerns about the suitability of casino company MGM Mirage's business partner in China. Now, MGM Mirage has an answer: cash out of Atlantic City.The company plans to divest its 50% stake in the Borgata casino resort, a person with knowledge of the negotiations said last week. Although it has been scouting for buyers it hasn't come to a deal, according to two people with knowledge of the talks.MGM Mirage hopes that its plan to sell its Atlantic City interests will convince New Jersey regulators to agree to curtail their regulatory oversight of the company. Any additional scrutiny has the potential to cause problems with MGM Mirage's business elsewhere.MGM Mirage disclosed last year that New Jersey's Division of Gaming Enforcement had issued a confidential report saying the company should disassociate from Pansy Ho, MGM Mirage's joint venture partner in Macau. It labeled her an “unsuitable” business partner.

via MGM Mirage Prepares to Sell Stake in Borgata – WSJ.com.

Here are some numbers. According to the latest-available financial report, Borgata was on track to show a net income of about $120 million in 2009. MGM Mirage gets half of that. In this economy, adding $60 million to your bottom line is nothing to sneeze at. There are expenses involved–particularly, as we see, regulatory-related expenses. And the threat of drawn-out litigation makes that $60 million a year look less and less attractive.

According to the 2008 MGM Mirage Annual Report, in that year the company spent $24 million on its MGM Grand Atlantic City development before pulling the plug due to the worsening economy. Now that we’ve all seen the city’s revenues fall back to 1997 numbers, it would be hard to argue that this was a bad decision. Unless something dramatic happens (that is, unless casino operators make something dramatic happen), Atlantic City is clearly a declining market.

What about Macau? According to MGM Mirage’s investor relations, the company earned $24 million in revenue from MGM Grand Macau in the third quarter of 2009. That pencils out to roughly $96 million for the year.

Which is greater? $60 million or $96 million? The decision seems obvious.

There is also the fact that Macau is the world’s fastest-growing casino market, and Atlantic City has, as I said before, gone back to 1997 and, with the imminent arrival of Pennsylvania table games, is poised to fall even further.

Even as an Atlantic City native, I’ve got to admit that MGM’s management has few options here. Clearly the most responsible decision for the company’s health is to stay in Macau.

To make a long story short, Atlantic City needs MGM Mirage far more than MGM Mirage needs Atlantic City at this point. Should this make a difference to the integrity of the licensing and enforcement process? Absolutely not. But there’s something to be said for over-zealousness. Past operators chased from Atlantic City by regulatory overkill–Hugh Hefner and Hilton Hotels are the most prominent–continued to do business in other states with not even a whisper of impropriety. Hilton was even invited back.

What does this all mean? New Jersey’s regulators aren’t doing the state any favors by throwing the book at MGM Mirage. The only beneficiaries might be the existing operators, who will have one less rival to face (if MGM decided to go ahead with their AC project), and even that’s debatable, since a project of the scale that MGM had proposed would have probably brought more people to town. This looks like a lose/lose situation.