03 July 2012
Genting Malaysia (GENM) joint venture with RAV Bahamas to open RM 74 mil luxury boutique casino Resort World Bimini Bay in the Bahamas
After the setback in Genting Malaysia Bhd's venture in Miami, the company has bounced back with a new casino development in the Bahamas worth US$24mil (RM74mil).
It was reported that the company had entered into a joint venture (JV) agreement last Friday with RAV Bahamas to open Resort World Bimini Bay, a luxury boutique casino on Bimini Island.
The 10,000 sq ft casino is set to be open in December at the Bimini Bay Resort and Marina, in north Bimini Island.
The casino will feature full-scaled table games, slots and sports betting in a venue similar to Genting's casinos in London.
Genting Malaysia plans to refurbish a structure, which was built more than five years ago. The casino will be the only one on Bimini Island which is 48 nautical miles off the South Florida coast, the United States.
Genting Malaysia's JV partner RAV Bahamas developed Bimini Bay and the Rockewell Island Beach Estates.
The casino will create at least 300 jobs for the island, and also help to boost tourism.
In May, the island's unemployment rate stood at 15% while youth unemployment was at 34%.
In January, Genting Malaysia's venture in Miami had taken a blow when the state legislature pulled a vote to liberalise gambling activities in Florida.
However, Genting Malaysia announced that it would be moving forward with plans for a luxurious mixed-use development on the bayfront.
The company, through its unit Resorts World Miami, has intended to build a US$3.8bil casino and 5,200-room hotel complex.
It had spent US$500mil purchasing real estate in Miami for the future casino. The vote has been postponed to next year due to lack of support.
Genting Malaysia had also planned to build a US$4bil convention centre at Aqueduct Racetrack in Queens, New York that would have been an extension of its existing project Resort World New York.
However, state governor Andrew Cuomo had said negotiations with the group had broken down.
Analysts believed the impact of Resort World Bimini Bay would be insignificant to the company as the outlay of US$24mil was small compared with Genting Malaysia's net cash of RM1.04bil as at first quarter ended March 31.
UOB Kay Hian Research analysts said in a report they are lukewarm to the new deal although it would be Genting Malaysia's first full-fledged casino in the United States as the Bahamian government had already approved it.
“However, we opine the value accretion to Genting Malaysia would be marginal given the small size of the casino to be built and also profits would be shared with its JV partner, RAV Bahamas,” the report said.
RHB Research analyst Hoe Lee Leng said the deal came as a surprise, as it was not mentioned by Genting Malaysia's management as part of its expansion plans.
However, it is believed that this development is part of the company's bigger plan to encourage the Miami government to vote in favour of legalising casinos.
HLIB Research said: “This news gave Genting Malaysia a little hope after disappointments from its casino expansion plans in New York and a destination resort in Miami.”
“This also further confirms our view that Genting Malaysia will be continuously seeking for other opportunities internationally,” it added.
Analysts pointed out that there might be a risk of acceptance with Bimini Island being known more for fishing activities rather than for its nightlife attractions.
According to The Miami Herald, Bahamian officials estimate the project impact at least 1,000 people indirectly.
The Bahamian government will help to provide training for the population of less than 3,000 people.
Bahamas Tourism Minister Obie Wilchcombe said he was discussion with Bahamas Air and two other major national airlines to add services to Bimini.