Analysts have “mixed feelings” on Genting Malaysia Bhd’s latest interest to develop and operate a video lottery facility at Aqueduct Racetrack in New York, the United States.
In a filing with Bursa Malaysia on Thursday, the company said it had made a submission via indirect wholly-owned subsidiary, Genting New York LLC (Genting NY) costing US$1mil for the rights to participate in the bidding process to develop and operate the video lottery facility.
The submission entry fee was placed on June 1 and Genting NY has until June 29 to evaluate the project and formally submit a bid.
A local gaming analyst said while Genting’s strategy to diversify its casino business abroad was generally seen as positive by retail and institutional investors to reduce its dependency on its local operations for growth, the move to develop and operate the video lottery facility was also perceived to be costly and risky.
“We understand the project involves billions of dollars,” he said, adding that Genting NY was not a frontrunner in the bid because it did not have a strong track record in the lottery business compared with other rivals.”
The analyst also said the returns may not justify the capital expenditure for the project.
It was reported that six bidders, including Genting NY, had placed US$1mil to obtain the rights to participate in the bidding process for the video lottery facility at the Aqueduct Racetrack.
Market observers say GTECH Corp, a wholly-owned subsidiary of Italian gaming company Lottomatica SpA, was likely the preffered bidder to negotiate for a seven-year contract with the New York Lottery to provide new online lottery solutions and services, and an option to be extended for three more years.
The analyst said GTECH had been a lottery technology and services provider to the New York Lottery since 1986.
The New York video lottery business is estimated to be worth over US$550mil over the contract period.
A foreign gaming analyst was also pessimistic about Genting NY’s chances of winning the bid.
“Genting NY chance of winning is at best hopeful” he said, adding that the video lottery facility required a different skill set and proven track record in running it.
The foreign analyst said Genting Malaysia already had a lot on its plate, such as ensuring its recently constructed Singapore casino operations, via 51.8%-stake in subsidiary Genting Singapore Plc, was profitable.
Genting Malaysia officials could not be reached for comment.
Genting Malaysia share price closed 2 sen down at RM2.75 on the Kuala Lumpur benchmark stock index.
by Danny Yap
danny@thestar.com.my
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