LOS ANGELES (Reuters) - MGM Mirage's plan to sell its stake in the Borgata casino in Atlantic City was approved on Wednesday by regulators after New Jersey authorities accused the casino operator of engaging with people connected to Chinese organized crime.

MGM lit on the plan of selling its 50 percent stake in the Atlantic City resort after New Jersey's division of gaming enforcement recommended last year that the state's gambling commission find MGM's Macau joint venture partner, Pansy Ho, "unsuitable."

Such a finding would have required MGM to cut ties with her and the fast-growing, lucrative Macau market if it intended to keep its New Jersey gambling license.

Ho is the daughter of Macau gambling tycoon Stanley Ho, who the New Jersey regulators say is linked to Chinese organized crime.

The recommendation on Pansy Ho was contained in a confidential report issued last year by the New Jersey Division of Gaming Enforcement.

The report, released publicly on Wednesday, concludes that Pansy Ho's relationship and financial ties to her father, as well as "her associations with persons alleged to be associated with organized crime render her susceptible to influence by unsuitable persons."

The report also said Las Vegas-based MGM's conduct in pursuing and consummating the Macau joint venture "raises concerns about its commitment to corporate regulatory integrity."

The gaming enforcement division said MGM's due diligence and compliance efforts were deficient.

MGM is laying the groundwork for an initial public offering of shares in the joint venture.

Gambling revenue in Macau, which overtook Las Vegas several years ago to become the world's No. 1 gambling center, rose nearly 70 percent in the first two months of this year. In Atlantic City, hurt by new competition from surrounding states like Pennsylvania as well as the recession, gambling revenue fell 25 percent between 2006 and 2009.

MGM once had plans to build a multi-tower project on 55 acres of land it owns adjacent to the Borgata, but those plans were put on hold several years ago.

"The DGE's (Division of Gaming Enforcement) report acknowledges there is no evidence that Pansy Ho has engaged in any wrongdoing or been accused of any illegal activity," MGM Chief Executive Jim Murren said in a statement.

The company owns the Borgata through a 50-50 joint venture with Boyd Gaming Corp.

MGM said it will place its interest in the Borgata and related leased land in a divestiture trust. The settlement mandates the sale of the trust property within a 30-month period.

If the company has not found a buyer within 18 months, the trustee would then take over the sales process, having another 12 months to conclude a deal.

Shares of MGM rose 4 cents to close at $12.33 on the New York Stock Exchange.

(Reporting by Deena Beasley; Editing by John Wallace and Richard Chang)