hile the Queens operation, Genting's first in the U.S., will initially be limited to 4,500 slot machines and electronic table games, Genting hopes it will eventually expand into a destination resort that would include upscale hotels and attract international travelers.
The company, which controls casino resorts in Malaysia and Singapore, oil palm plantations and the Norwegian Cruise lines, is hoping Aqueduct will open the gateway to this country's vast gaming terrain. With roughly us$ 5 billion in annual revenue and a us$ 27.6 billion market capitalization combined, Genting is eyeing U.S. gaming opportunities in places like Las Vegas, California and Massachusetts and has plans to possibly spin off its U.S. operation into a separate public company at some point. "It's real important for us to make [Aqueduct[ a showcase event for the company," Mike Speller, President of Genting New York said in an interview last week.
But challenges abound. The US gaming landscape is still struggling to recover from a crippling recession and high unemployment that forced tourists and gamblers to cut back visits to the blackjack tables, slot machines and stays at glitzy hotels. Aqueduct also faces stiff competition from casinos in Atlantic City, Connecticut and Pennsylvania where table games were recently approved.
Moreover, Genting faces potential conflicts because KT Lim, the controlling shareholder of Genting, already is involved in Indian gaming operations in the U.S. through his family's private investment company Kien Huat Realty.
Genting already has gotten dragged into an imbroglio involving one of Kien Huat's investments: a controlling stake in Empire Resorts, which owns the Monticello Casino & Raceway in upstate New York. The former CEO of Empire and a large shareholder, Joseph Bernstein, has been publicly fighting with Kien Huat for months on a range of issues. But most recently, Bernstein and several Empire board members have also attacked Genting for not allowing Empire to participate in the Aqueduct bid.
Genting officials deny that Genting or Kien Huat committed any wrongdoing noting that Empire didn't have the financial strength to participate in an Aqueduct bid. They also predicted that Kien Huat's other investments in US gaming won't present hurdles to Genting's growth in this country. If any conflicts arise, Genting, a public company, will "take the first seat," says Jay Walker, a senior adviser to Genting who is involved in the Aqueduct project.
Genting officials say that relationships between private and public companies involved in related businesses are different in the U.S. and Malaysia. "If the [Securities and Exchange Commission] says they don't want private investment, they're not going to have it," Walker says.
Genting was founded by Lim's father and made its first big splash in the Asian gambling world in 1971 when it opened a casino and resort in the Genting Highlands of Malaysia, which now attracts 19 million visitors per year. Most recently, it beat out numerous other global gaming contenders to develop one of the two new casinos that has opened in Singapore. Meantime, Kien Huat has been involved in such Indian gaming operations as Foxwoods Resort Casino in Connecticut and the Seneca Niagara Casino in Niagara Falls, N.Y.
Genting initially didn't participate in the decade-long bidding process for Aqueduct that was mired in controversy. It decided to participate in the latest round partly because state officials made it clear that the selection process would be open to public scrutiny. The company snatched up the prize with a bid that included a us$ 380 million upfront payment. "All the Las Vegas companies have left to Macau," says Walker, referring to the U.S. companies that are flocking to that Chinese gambling mecca. "This Asian company is coming to America."
Genting plans to have 1,625 gaming machines open within six months of closing the deal. Executives say they're in no hurry to expand Aqueduct into a full casino but believe that will likely happen in 10 to 20 years given national gaming trends.
Officials working with Genting note that Empire couldn't have bid on Aqueduct because of its financial constraints. "Empire was in no position to put up the $1 million entry fee, let alone the us$ 380 million payment to New York State," a Genting spokesman said.
But Genting's critics disagree, pointing out that Empire and Genting could have submitted a bid together. They are also unhappy that Kien Huat's two representatives on the Empire board, Empire's chairman G. Michael Brown and Colin Au, worked with Genting on its Aqueduct bid. "Any opportunity they had, they had an obligation to bring it to Empire first," Bernstein said.
An Empire spokesman declined to comment. Genting officials confirmed that its representatives on the Empire board helped Genting with its Aqueduct bid but denied they did anything improper. "These venues are 100 miles apart and draw from a totally different customer base," the Genting spokesman said. "As any regulatory body that has looked at Genting's Aqueduct bid has confirmed, this process was done entirely by the book."