MALAYSIA

Resorts World Genting threatened by regional competition

Resorts World Genting is one of Asia’s oldest casino resorts, opening its first hotel in 1971, though analysts say the property is now at risk of losing its dominant position to upcoming jurisdictions in the region.

Genting’s founder Tan Sri Lim Goh Tong conceived the idea of a mountain resort in 1963 when he was working on a hydro-electric project in the Cameron Highlands. The company still enjoys a monopoly license in Malaysia and was one of the only true resorts offering legal gambling in South East Asia.

Now, after the opening of two integrated resorts in Singapore and the rapid pace of growth in Cambodia and the Philippines, analysts at JP Morgan estimate it will lose its position as the third-largest gaming market in the region to Cambodia.

“We think this shift accelerates with regional property ramp-up at a time when Genting Malaysia looks to cut promotional spending, driving visitation away from its property. Reiterate ‘Underweight’ on Genting Malaysia,” it said.

The Malaysian operator has been cutting back on marketing and other costs to offset the impact of greater-than-expected tax hikes in last year’s budget. Analysts have warned the cuts may harm its ability to woo VIPs.

Mainland Chinese visitors to Cambodia have increased over a third over the last two years.

“We think a large part of these visitors are gamblers, given the correlated growth of gross gaming revenue (GGR) with tourism in Cambodia and our channel checks. We believe Malaysians may be the second-largest contributors of GGR in some of the larger casinos in Cambodia,” JPMorgan stated.

“In Malaysia, only 39 percent of the population is allowed entry into casinos in a highly penetrated market and major capacity expansion are ‘once-in-a-decade’ events entailing large investments,” the firm said, referring to the fact that Malaysia’s predominantly Muslim population is banned from entering casinos.

Still, after a raft of negative blows, the company in late July announced that it had reached a legal settlement in a dispute with Fox Entertainment Group and its related companies and as a result will be permitted to use some Fox intellectual property in an outdoor theme park that is under development.

The theme park with Fox was seen as the key draw and a central plank of a major property revamp launched in 2013, known as the Genting Integrated Tourism Plan. Fox and its parent Disney pulled out of the project in late 2018, casting doubt as to whether Genting would go it alone and triggering a series of lawsuits.

“As part of the settlement terms, the parties have entered into a Restated Memorandum of Agreement dated 25 July 2019 granting GENM a license to use certain Fox intellectual properties,” it said.

“GENM is currently updating its development and construction plans to complete the outdoor theme park utilising both Fox and non Fox intellectual properties. The outdoor theme park shall also be renamed,” it said, announcing the settlement.

Analysts are now optimistic Genting will open the park earlier than they had anticipated, providing a new revenue catalyst.

Maybank said the group had been putting out full-page hiring ads for staffing the park in late July.

As Genting had previously implied a lead time of six to nine months between hiring and opening of the theme park, the latest moves could signal a theme park opening for 20Q1, rather than the previously forecasted 21Q1 from Maybank.

In other news, Genting recently announced plans to privatize the currently-loss-making Empire Resorts Inc, the company which owns and operates Resorts World Catskills in New York.

Genting said the acquisition will be made by its wholly-owned subsidiary Genting (USA), which will acquire 13.2 million shares in Empire Resorts Inc from its single largest shareholder, Kien Huat Realty III (KH) for $128.6 million.

Genting said the move will better position the Resorts World brand in the northeastern US gaming market through more effective cross-marketing with Resorts World Casino New York City.

Malaysia bars police from gaming outlets

Inspector-General of Police Abdul Hamid Bador has barred policemen from entering any entertainment and gaming outlets, in efforts to prevent police corruption

. Hamid said the move was in reaction to officers being offered bribes in the form of freebies from outlets. “There are police officers who celebrate birthday parties in these premises for free. That is corruption,” said Hamid.

He said the Integrity and Standard Compliance Department would be monitoring officers with disciplinary action taken against offenders.

“If we receive information about their presence at entertainment outlets, they will be subject to the same process as civilians and undergo urine and blood tests,” he said.

KL renews intent to update gambling laws

The Malaysian government has again called for amendments to the country’s laws on gambling to include online gambling, local media reports.

Home Minister Muhyiddin Yassin said that the existing laws governing gambling were drawn up in the 1960s. “(They need) updating because, at that time, there was no online gambling,” he said. “The government is fully aware of the rampant illegal gambling activities in the country, including in Sibu, Sarawak.”

Yassin added that there were some syndicates earning up to RM300,000 a day, operating without a license and with only two to three workers. “The number of syndicates is increasing,” he said.