In another twist to the New York City’s Aqueduct racino project, the New York State Division of Lottery is now permitted to continue to evaluate Genting New York LLC’s (Gen NY) bid for at least another week.
The new timeframe came after a state Supreme Court judge last Friday lifted a temporary restraining order he had earlier placed on the evaluation process.
Sources close to Genting group in Kuala Lumpur said the outcome of the court hearing “basically says the evaluation process continues”. Genting Malaysia Bhd (GenM) wholly owns Gen NY.
According to US press reports, New York Supreme Court Judge Barry Kramer had said in last Friday’s proceedings that he would continue hearing Aqueduct Entertainment Group’s (AEG) lawsuit against the state of New York on July 29. The judge is also expected to make a decision on that day.
AEG is suing the state for denying its application for a gambling licence in March even though its consortium was named the winner two months earlier in the bidding process to undertake the racino project.
US press reported last Friday that a lottery division spokesperson had said that the agency was continuing its vetting of Gen NY’s bid and still planned to announce a decision on Aug 3, unless it was ordered otherwise.
Gen NY is the last remaining bidder for the Aqueduct racino project, after two others were disqualified by the Division of Lottery, as announced on July 6.
Genting management has guided analysts that being the sole remaining bidder did not guarantee the group would win the project.
Analysts have said the concern for such a project was the racetrack element of the business that comes with high costs for the upkeep of the racehorses.
Such racetrack operations both in Malaysia and the US have usually been loss making due to these costs.
The video slot machine component of a racino project was the more lucrative part, being an asset-light business with a high return on equity, an analyst had told The Edge Financial Daily.
If Gen NY loses the bid at this point, the group would forfeit a US$1 million (RM3.21 million) entry fee, which was not significant to the group, which reported a RM1.32 billion net profit on revenue of RM4.99 billion for the financial year ended Dec 31, 2009, the analyst had said.
Meanwhile, the Division of Lottery has not responded to SL Green Realty Corp’s request for Genting’s bid to be made public.
SL Green, which is Manhattan’s largest commercial landlord, was one of the bidders disqualified in the July 6 announcement.
The company is seeking to prove that Genting had an unfair advantage as bids from the previous round had been public and was gearing up for a potential lawsuit, according to US media.
Genting Malaysia rose seven sen or 2.65% to close at RM2.71 last Friday.
This article appeared in The Edge Financial Daily, July 26, 2010.
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