MALAYSIA

Genting settles with Wynn, though legal issues drag

Genting Malaysia looks set to go it alone with its outdoor theme park, while its legal dispute with former partners Fox Entertainment and The Walt Disney Co. drags on.

The company opened the park as part of a Chinese New Year celebration, allowing visitors to stroll around the zone and buy food and drinks from food trucks. However, no rides were operating.

The Fox-themed entertainment park was scheduled to be the centerpiece of the revamped Resorts World Genting IR, the only legal casino operation in Malaysia. However, Fox pulled out in November last year, amidst speculation that new owner, Disney, had not wanted its brand associated with gambling.

Genting launched a lawsuit in the U.S. seeking $1 billion in damages from Fox, prompting a response in January under which the U.S. company claimed breach of contract and claimed $46.4 million from Genting. However, Fox didn’t seek to stop the opening of the park.

“What piqued our interest is that neither Fox nor Disney sought an injunction to preclude GENM from opening the OTP as we had earlier feared,” Maybank analyst Samuel Yin Shao Yang said in a note. “This implies that GENM may be able to proceed to either operate the OTP by itself or partner with other studios.”

Maybank said it expects the park to open in the first quarter of next year and will help drive visitation by two million arrivals, or 9 percent a year.

Genting Malaysia, combined with its parent company and sister, Genting Singapore, forms one of the world’s largest gaming groups with operations spanning from the Philippines to New York, the Bahamas, the U.K. and a planned IR in Las Vegas.

However, the group has been mired in legal action over the past year.

Aside from the issues with its Malaysian theme park, Genting came under fire late last year from Wynn Resorts, which accused it of seeking to mislead clients by copying the design of Wynn Las Vegas and Encore, which are just across the street from the proposed $4 billion Resorts World Las Vegas.

Genting has since directed its design team to make several changes and as a result Wynn has dropped its lawsuit. The revised rendering is simpler with no giant Chinese lantern hanging from the side of hotel towers. It also colours the hotel towers in scarlet red and not the maroon red that Wynn had taken issue with.

“Genting’s Resorts World Las Vegas project will be the launching point for the next generation of integrated resorts, and the aesthetics of the project will play an important role in its future success,” said Michael Levoff, Senior Vice President of Public Affairs & Development, Genting. “While the company believes the design to have had differences with Wynn and Encore’s once fully realized, after further consideration and conversations with the Wynn team, we have directed our design team to make several changes that will clearly differentiate the two properties. This mutually beneficial settlement will allow Genting to continue to develop Resorts World Las Vegas with minimal impact to cost and the overall project timeline.”

Michael Weaver, Wynn’s chief communications officer said. “Their future success will benefit all of Las Vegas.”

At home, the group is also involved in legal action, this time asking for a judicial review of the Ministry of Finance’s decision to change the treatment of tax incentives that were granted as part of the Genting Integrated Tourism Plan.

Genting said its application for the tax incentives were granted in Dec. 2014. The group was entitled to claim income tax exemption equivalent to 100 percent of qualifying capex incurred for 10 years.

In Dec 2017, the MOF amended its decision to one which does not remove the tax incentives but effectively prolongs the utilisation period of the tax incentives significantly, Maybank said.

The change led to an unpleasant surprise in the group’s Q3 results, with its core tax rate effectively jumping to 25 percent from 15 percent, helping contribute to an 11 percent decline in net profit.

The Kuala Lumpur High Court granted leave for review in January, with the proceedings expected to start at end May.

Many analysts have written down their earnings forecasts for Genting, given the changes in tax treatment to its capital investments, as well as surprise hikes in gaming taxes in the most recent budget.

Pensioners caught in drug-fuelled gambling bust

Police in a district of Malaysian capital Kuala Lumpur busted an illegal gambling ring, made up mostly of senior citizens, who were high and playing mahjong in a shop, local media reports.

A total of 20 people including nine women were arrested when police raided the shop-lot that was turned into a gambling spot on January 26. Those arrested were aged between 50 and 79. “Upon checking one of the rooms inside the shop-lot, the raiding police team found various types of drugs including heroin, ecstasy, and Erimin 5 pills.

“The seized drugs alone were worth RM31,100. Police also seized RM4,000 in cash and mahjong chips,” a police statement said.

Police under fire for overseas freebie

A Malaysian police delegation has come under fire for accepting a “lavish overseas trip” to Turkey, which was allegedly paid for by a private gaming firm.

It was reported that the delegation went to Turkey to learn how to better combat illegal online gambling. The trip was alleged by whistleblower site Sarawak Report to have cost over RM300,000 (US$73,500), with an 18-strong delegation, raising concerns about the motive of the sponsorship

. Finance Minister Lim Guan Eng said that while the trip was approved by the Totalisator Board, an agency under the Finance Ministry, the money did not come from the government. “The source of funding is not the Finance Ministry.

“The source of funding is Da Ma Cai, a number forecasting company,” Lim told local reporters.