Nomura questions whether racino upgrade would pay off
MGM Resorts’ withdrawal from the process to win one of three casino licenses in New York has increased the likelihood that Genting Malaysia’s Resorts World New York City will be able to fulfill its dream of upgrading to a full casino licence, but analytical group Nomura is unsure as to whther the US$5.5bn investment will pay off.
It believes that the high tax on tables and slots put forward by the Malaysian casino group, along with the proximity of competing projects, could make Genting’s proposal unviable
Nomura analyst Tushar Mohata said: “Genting Malaysia’s supplemental bid submitted yesterday revealed aggressive terms, including a US$600m license fee (versus the minimum requirement of US$500 million) and industry-leading tax rates of 56 per cent on slots and 30 per cent on tables. These rates significantly exceed those proposed by the others.
“Given that some of Genting Malaysia’s Resorts World assets like Resorts World Catskills, Resorts World Bahamas and Resorts World Las Vegas also have sub-par returns, one might also question the economics of a multi-billion dollar potential Resorts World NYC expansion.
“While Genting Malaysia’s higher license fee payment comes with expectation of a 30-year license term, we do think that Genting Malaysia’s proposed tax rates are on the high side, although this is likely to have been decided prior to knowledge of MGM’s withdrawal. One other factor is that the distance between Cohen/Hard Rock’s Metropolitan Park and Resorts World NYC is only 10 miles, raising cannibalization risks.”
“The full project ROIC impact will not be clear for several years given the staged nature of the capital deployment,” Mr. Mohata added. “Genting Malaysia’s phased development approach should better its capital management and help to mitigate risks.”
Resorts World New York City is hoping to open Phase 1 of its upgraded casino, including the addition of 250 tables by July next year. Eventually, it wants to offer 6,000 slot machines, 800 gaming tables, 2,000 hotel rooms, a 7,000-seat arena, more than 7,000 parking spaces, more than 30 food and beverage outlets, a magnificent spa and more than a dozen acres of community greenspace.
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Nomura questions whether racino upgrade would pay off MGM Resorts’ withdrawal from the process to win one of three casino licenses in New York has increased the likelihood that Genting Malaysia’s Resorts World New York City will be able to fulfill its dream of upgrading to a full casino licence, but analytical group Nomura is…
The post High tax and proximity of Citi Field casino could hamper Resorts World New York City’s viability appeared first on G3 Newswire.