Genting Malaysia Bhd is one step closer to clinching the licence to develop and operate a video lottery facility in New York City’s Aqueduct racetrack following the disqualification of two of the three proposals received by the New York Lottery.
Genting Malaysia via its wholly owned subsidiary Genting New York LLC had on June 1 paid an entry fee of US$1 million (RM3.22 million) to participate in the bidding process.
A statement by the New York Lottery on Tuesday said the disqualified proposals did not conform with the requirements of the competition and instead, attempted to negotiate for terms more favourable to the bidders.
The two disqualified proposals came from a consortium comprising SL Green, Hard Rock International and Clairvest Group, and Penn National Gaming.
“The third proposal by Genting New York appears to conform with all requirements of the bid submission process and will continue to be evaluated,” the statement said.
The proposals were submitted in response to a Request for Proposals (RFP) issued by New York Lottery on May 11, 2010, requesting bidders to submit with their proposals a signed memorandum of understanding (MoU) and other documents.
“Only Genting complied with those requirements,” New York Lottery said.
It explained further that both the SL Green consortium and Penn National failed to submit signed copies of the MoU. Instead, their proposals offered altered versions of the MoU containing numerous “material deviations”, New York Lottery said.
It added that the disqualified proposals also failed to satisfy other mandatory requirements of the RFP.
The proposals were received on June 29 for the “racino” project which combines racetrack and casino gaming operation. The Aqueduct Racetrack racino would include 4,500 video slot machines, retail and F&B outlets. The existing 192-acre Aqueduct is the only racetrack within New York’s city limits.
In the announcement, New York Lottery said if Genting New York’s bid was accepted, it expected to make a recommendation for approval to Governor David Paterson, the temporary president of the Senate and the speaker of the Assembly by Aug 3.
Hwang DBS Vickers in a report on July 2 wrote that the racino operations may contribute around RM270 million or 15% to Genting Malaysia’s 2011 Ebitda although it added that it would take time for operations to be fully ramped up and there had been no capex guidance from management due to the sensitivity of the bidding process.
Should it succeed, Genting Malaysia will need to pay a minimum upfront licensing fee of US$300 million to run the facility.
Genting Malaysia closed unchanged yesterday at RM2.62 with 6.23 million shares done. The stock had been battered last Friday falling 4.38% to RM2.62 following the announcement of the acquisition of Genting Singapore PLC’s UK casinos for RM1.7 billion.
This article appeared in The Edge Financial Daily, July 8, 2010.
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