Stanley Ho, the Chinese gaming tycoon, could not believe the proposal he received in the spring of 2002. “Are you serious,” he asked Philip Wang, an emissary sent by MGM Mirage to enquire about the tycoon's interest in forming a Macao joint venture with the US gambling group.

“We are very, very serious,” replied Mr Wang, a senior vice-president for MGM Mirage.

“[The approach] was really a wild card,” he later told investigators from New Jersey's Division of Gaming Enforcement. “At the time, we were very desperate.”

MGM Mirage, controlled by Kirk Kerkorian, had finished fifth in the race for three new casino concessions in Macao, the Chinese special administrative region that is today the world's biggest gaming market.

One had gone to Mr Ho's Sociedade de Jogos de Macau, the others to MGM Mirage's US rivals, Las Vegas Sands and Wynn Resorts.

“We licked our wounds for a bit, and then tried to analyse whether there were any other opportunities for us to enter the Macao market,” Gary Jacobs, MGM Mirage's former general counsel, told the DGE in a regulatory report completed in May 2009 but only released this week.

MGM Mirage eventually formed a joint venture with Mr Ho's daughter, Pansy, that gained entry to Macao after three more gaming concessions were approved by the government.

The report, citing Mr Ho's alleged association with Asian organised crime figures, recommended that Pansy Ho be declared an “unsuitable” partner and that MGM Mirage “disengage from any direct or indirect business or financial association with [her]”.

But rather than heed New Jersey's directive, MGM Mirage this week agreed to sell its 50 per cent interest in the Borgata Hotel Casino and Spa in Atlantic City and continue its partnership with Ms Ho.

Ms Ho declined to comment on the New Jersey report. Mr Ho has consistently denied any connections with Macao or Hong Kong criminal gangs, or triads.

“The DGE's report acknowledges there is no evidence that Pansy Ho has engaged in any wrongdoing or been accused of any illegal activity,” Jim Murren, MGM Mirage chief executive, said in a statement.

But the DGE's report lays bare the company's efforts to enter Macao and harshly criticises its due diligence procedures.

The DGE also details Ms Ho's financial dependence on her father. According to the report, Mr Ho established a special “Petunia Trust” on his daughter's behalf, which she used to fund her investment in the joint venture with MGM Mirage.

In addition, Ms Ho borrowed money from Goldman Sachs, HSBC and UBS.

The patriarch's largesse also extends to Ms Ho's younger sister, Daisy, who the report says receives a monthly “allowance” of $25,000 from her father.

This is in addition to the considerable salaries, expense accounts and share benefits both women enjoy as executives and directors at their father's holding company, Sociedade de Turismo de Macau, and Hong Kong-listed conglomerate Shun Tak Holdings.

The attempt to form a joint venture with Mr Ho foundered in 2003 when a regulator in Nevada, where MGM Mirage is based, warned that the state's Gaming Control Board would not approve it.

“Specifically, [the regulator] raised concerns about Stanley Ho's alleged organised crime connections, issues involving loan sharking and debt collection at his Macao casinos, and Stanley Ho's [negative] experiences with other casino regulatory agencies,” the report says.

While there is no evidence that Mr Ho is personally connected to the Asian underworld, his casinos' long-established practice of sub-contracting so-called “VIP rooms” to outside operators has given an unsavoury cast of characters entry to Macao's gaming market.