Genting Malaysia strong contender for New York City new casino license

KUALA LUMPUR: Analysts said Genting Malaysia Bhd is a strong contender for one of the three new casino licences being considered for the New York City (NYC) area, which could be awarded late next year.

They anticipate that the group's Resorts World New York City (RWNYC) could obtain one of these licences by leveraging its expertise in the gaming industry.

This achievement could lead to the transformation of its  video lottery terminal facility into a comprehensive casino establishment.

An analyst said securing the casino licence would serve as a catalyst for Genting Malaysia.

"Should RWNYC win the licence, the minimum required capital of US$1 billion could be funded by the sale of its Miami land, for which it has received an offer in excess of US$1.23 billion," he said.

The New York Gaming Facility Board initiated a request for application (RFA) for the issuance of three full casino licences in the downstate area on Jan 4. The RFA emphasised that 70 per cent of the evaluation criteria was dedicated to economic activity and business development factors.

These include considerations such as capital investment, maximising state and local revenues, creating high-quality job opportunities and establishing gaming facilities with top-tier amenities.

Potential bidders for these licences include prominent industry players like Las Vegas Sands, Wynn Resorts and financier Steve Cohen, who has formed a partnership with Hard Rock International. 

According to New York's casino law, successful licence recipients are required to pay a one-time fee of US$500 million to the state.

Bidders are expected to vie for these licences based, in part, on their proposed tax contributions.

Genting Malaysia and MGM Resorts International are keen on expanding their presence in NYC. 

The gaming group has said expanding its gambling offerings in NYC would significantly increase its annual tax contributions to the state by US$1 billion. Last year, RWNYC reportedly contributed over US$600 million in taxes and levies.

Insiders in the market suggest that Genting Malaysia's bid for the NYC casino licence was part of a broader strategy to tap lucrative markets and address recent financial challenges.

"With so few bidders, this suggests that Genting Malaysia is well-positioned to secure the bid, given that there are three licences up for grabs.

"There's certainly potential for success. However, the magnitude of their potential win will only become clear upon an official announcement," said the insider.

According to Singapore Institute of International Affairs senior fellow Dr Oh Ei Sun, it is customary for entertainment and gaming conglomerates to shift their operations to where the clientele is most lucrative.

"They (Genting Malaysia) must have found New York to be an attractive location for their business  compared to some of their existing venues.

"Genting Malaysia has other operations in the United States, so this should be seen as an expansion there if they win." 

Higher profit for Genting Malaysia?

According to analyst projections, RWNYC may make an extra RM266 million in net profit in fiscal year 2026, and even bigger profits moving forward.

Genting Malaysia's equity fair value was anticipated to increase by 42 to 50 sen per share as a result of this development, they said.

The gaming income for fiscal year 2023 increased by 25 per cent year-on-year in the VIP and non-VIP segments, mostly due to the continued recovery in the number of international visitors.

VIP wins increased by 18 per cent, while non-VIP wins increased by an even greater 33 per cent in the same period.

"As an existing gaming facility, with a recent US$400 million expansion, this puts RWNYC in a strong position as it will be able to swiftly kick-start 'live' table games and generate tax income and jobs for the state," said another analyst.

Tradeview Sdn Bhd chief executive officer Ng Zhu Hann said Genting Malaysia stood to increase its revenue if it secured one of the NYC casino licences.

He emphasised that achieving the pledged US$1 billion in taxes was feasible for Genting Malaysia if it got the licence.

"Genting Malaysia's brand, Resorts World, has long-standing operational experience in New York. The landscape is competitive, as casino operators want to win new casino licences that will allow them 24-hour operations."

Corporate finance expert David Singh said Genting Malaysia's total debt-to-total capital ratio had increased over the last 10 years, with total loans amounting to about RM13 billion as of December 2023. 

He emphasised the Covid-19 pandemic's effect on the stock's performance, which dropped from RM4.32 to RM2.70.

He said if Genting Malaysia obtained a gaming licence and agreed to pay taxes, it could have an impact on all its liabilities.

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