Genting Malaysia down further
Its shares decline as clarity on the gaming scene in New York will emerge in November
Shares of Genting Malaysia Bhd declined further in spite of sentiment among analysts that the firm still had a fighting chance of expanding its gaming operations in New York.
PETALING JAYA: Shares of Genting Malaysia Bhd declined further yesterday, in spite of sentiment among analysts that the firm still had a fighting chance of expanding its gaming operations in New York.
Investors likely held their breath as Genting Malaysia slipped five sen lower to RM3.56, close to its day-low of RM3.53, on heavy volume of 4.3 million shares, extending Friday’s 4% losses.
The company’s 49.3%-parent Genting Bhd, however, rose eight sen to finish at RM9.59 on 1.81 million transactions.
Clarity on legislative changes is only expected to emerge in November, when a bill that will enable the opening of up to seven new Las Vegas-style casinos in upstate New York is put to a public vote.
New York governor Andrew Cuomo had said last Thursday that his government intended to set up three full-fledged casinos under phase one of a plan that aimed to keep potential gambling revenue from New York City’s 8.2 million residents and 50 million tourists within the state.
The move, a scaled-down version of the original proposal to have seven casinos beyond native land, was also intended to give a boost to the economy upstate by increasing tourism dollars and footfall via new destination resorts and casinos outside the city area.
Gambling businesses there have traditionally been the domain of native American tribes, who own five casinos and three bingo parlours.
Steven Cymbrowitz, an assemblyman for Brighton Beach and chair of its Alcohol and Substance Abuse Committee, called the announcement “great news for New York State, which would benefit from the more than US$1bil (RM3.02bil) in economic activity that could be generated by casino gaming, and for our residential communities here in the city that dreaded the potential negative impact of gambling venues on our neighbourhoods”.
Stop the Coney Island Casino, a lobby group, said via its executive director Steve Zeltser: “One simply needs to read between the lines and see that this new plan simply states there will be no casinos in New York City, for now. We call on the governor to release the details of phase 2 of his casino expansion plan.”
While market observers lamented that the new plan doused Genting Malaysia’s original proposal to expand its Resorts World New York (RWNY) in Queens into a US$4bil convention centre and integrated resort, some held out to the hope that Cuomo was leaving the door open to city casinos under phase 2.
RWNY currently operates a racino, with horse betting and video slots but no table games, which is the sole preserve of the native American casinos. “For Genting Malaysia, the ideal situation is to upgrade RWNY, located in New York City, into a commercial casino,” Maybank IB Research said in a report.
However, the research house remained unperturbed based on three factors: the proposals had yet to be approved, city casinos had not been ruled out and upstate casinos may eventually be located near the city.
“Shortly after his proposal, Cuomo stated that he did not rule out commercial casinos in New York City for phase 2. We believe this is because not many gaming companies are willing to invest heavily in upstate casinos when footfall is higher in New York City.
“New York City welcomed a whopping 50 million visitors in 2012. Simple economics will likely compel him to revisit the idea of New York City casinos in the future,” Maybank IB Research told clients yesterday.
“As RWNY is located in New York City, Genting Malaysia may not be able to upgrade it into a commercial casino under Cuomo’s proposal.
“That said, we are unperturbed as under the same proposal, no commercial casinos will compete with RWNY within New York City, and Genting Malaysia can still bid to build a casino in an upstate location 0near New York City.
“Therefore, we are still bullish on Genting Malaysia’s merger and acquisition prospects,” it added.
The constitutional amendment to liberalise casino gambling in New York was given first passage in March last year and needs to be approved by a second legislature this year before a referendum is called in November to obtain public approval.