Genting Malaysia ‘virtually assured’ of getting New York casino license: Maybank

01-10-2020 |  

Genting Malaysia’s bid to secure one of New York’s long-awaited commercial casino licenses is gaining momentum, with Maybank analysts saying the group is ‘virtually assured’ of approval in a move that could transform its earnings outlook.

New York state is preparing to award up to three downstate casino licenses by year-end. With only three qualified bidders remaining, analysts argue the authority is likely to issue all licenses to maximize immediate revenue, paving the way for Genting’s Resorts World New York City (RWNYC) to upgrade from a video-lottery facility to a full-scale casino.

‘We gather that all three remaining bidders — including Genting Malaysia — are virtually assured of a license each,’ analysts said, noting New York could collect at least $1.5 billion upfront if all three licenses are awarded. They added that RWNYC’s proposal is viewed as the ‘strongest’, positioning Genting well as regulators near a decision.

Genting’s proposal stands out for its speed, scale and tax contribution, Maybank added. RWNYC aims to open a permanent casino with 4,000 machines and 250 tables just six months after licensing — far earlier than rivals that may not launch before 2030 — eventually expanding to 6,000 slots and 800 tables by 2029.

It has pledged the highest license fee at $600 million and the steepest tax rates, and plans the largest gaming floor as well as nearly 2,000 hotel rooms and a 7,000-seat arena. The group has also committed a $2-billion community benefits package, including housing support.

The license would allow RWNYC to deploy table games and expand significantly, placing it among the country’s largest casino properties. Maybank projects New York’s downstate market could reach $6.5 billion in gross gaming revenue by 2031 — second only to Las Vegas — with RWNYC potentially generating $2.7 billion, equal to a 42 percent share.

Analysts expect the project to deliver a major boost to Genting Malaysia’s earnings. Forecasts now suggest net profit from the expansion could peak at MYR1.93 billion ($455 million) in 2030, sharply higher than earlier projections.

‘We estimate RWNYC’s expansion will add MYR0.47 per share ($0.11) to Genting Malaysia’s equity value,’ analysts wrote, noting further upside if the gaming tax rate is ultimately lower than proposed or if non-gaming assets are sold to the state.

With the Empire State nearing a decision and a multibillion-dollar gaming market on the horizon, analysts say the license process could be a defining milestone for the Malaysian operator.

‘RWNYC’s expansion represents a step-change for Genting Malaysia’s earnings,’ the report said. ‘We see the group on the cusp of becoming a major player in the US gaming landscape.’

Source: AGBrief