Genting New York LLC, which is believed to be linked to Genting group or its chairman and chief executive Tan Sri Lim Kok Thay and his family, has emerged as one of the six bidders for a project at the Aqueduct Racetrack in New York City.

According to US press reports, the six bidders had each paid an entry fee of US$1 million (RM3.32 million) refundable deposit on June 1 towards securing the project that involves the construction as well as operation of a ?racino? at an up to 90,000-seat racetrack.

A racino is a combined racetrack and casino gaming operation, with the Aqueduct Racetrack racino expected to hold 4,500 video slot machines. The existing 192-acre Aqueduct is the only racetrack within New York?s city limits.

It had made a submission via indirect wholly-owned subsidiary, Genting New York LLC (Genting NY) costing US$1mil for the rights to participate in the bidding process to develop and operate the video lottery facility. The submission entry fee was placed on June 1 2010 and Genting NY has until June 29 to 2010 evaluate the project and formally submit a bid.

Genting New York is linked to both the Genting group of companies and the private vehicle of the group?s controlling Lim family, Kien Huat Realty Sdn Bhd. Kien Huat Realty holds a 32.28% direct and 7.32% indirect stake in Genting group holding company, Genting Bhd. However, Genting Bhd?s latest annual report does not list Genting New York as a subsidiary or associate of the company.

Kien Huat Realty III Ltd (Kien Huat III), which is owned by a Lim family trust, had already acquired a large stake in another racino in New York state in August 2009. Kien Huat III had bought a stake of 50% less one share for US$55 million in Nasdaq-listed Empire Resorts Inc that runs the 230-acre Monticello Gaming and Raceway, located in Monticello, New York, some 145km from Manhattan. According to a stock exchange filing by Empire on March 8, 2010, Kien Huat III had upped its stake to a controlling 50.28%.

It had been reported that the private vehicle was used to buy into Empire rather than the listed Genting group because the latter?s minority shareholders would have been unlikely to stomach the acquisition of a distressed and loss-making casino.
Kien Huat had agreed to provide fresh cash injection with a US$10 million credit facility, and was to settle any remaining debts arising from Empire?s US$4.4 million senior credit facility with The Park Avenue Bank of New York.

The winning bid is to be announced in early August 2010.
Due to issues that caused a breakdown in an earlier round of bidding that saw the winning consortium Aqueduct Entertainment Group (AEG) losing its selection in March 2009, the current requests for proposals have included provisions that prohibit comment on the bidding, as well as lobbying, according to a US publication.

The current bidders for the project include three from the previous round ? Delaware North Cos, Penn National and SL Green Corp. The three new bidders entering the fray are Genting New ork, Toronto-based Clairvest Group and Empire City Casino-Yonkers Raceway that is tied to the Rooney family who are the long-time owners of sports team Pittsburgh Steelers. Clairvest had been part of the failed AEG consortium bid but is now bidding separately.

Going forward ?

Industry observers say Genting New York LLC's reported bid to construct and operate a slot machine-only casino at New York Aqueduct Racetrack as positive.

The bid would act as a platform for Genting Group to expand further in the US. Also, it should be earnings enhancing in the long-term although any profit contribution could be small in the early stages.

The issue was whether the project would be injected into the subsidiaries of Genting Group as Genting New York is believed to be owned by Tan Sri Lim Kok Thay. The only subsidiary with financial muscle to acquire the racino project should Genting New York win, was Genting Malaysia Bhd (GenM). GenM's cash reserves stood at RM5.3 billion (US$1.6 billion) as at end-March 2010.

Meanwhile there are some who are skeptical about Genting Malaysia Bhd?s latest interest to develop and operate a video lottery facility at Aqueduct Racetrack in New York, the United States.

While Genting?s strategy to diversify its casino business abroad was generally seen as positive by retail and institutional investors to reduce its dependency on its local operations for growth, the move to develop and operate the video lottery facility was also perceived to be costly and risky.

It is learnt that the project involves billions of dollars. Genting NY was not a frontrunner in the bid because it did not have a strong track record in the lottery business compared with other rivals. The returns may not justify the capital expenditure for the project.

It was reported that six bidders, including Genting NY, had placed US$1mil to obtain the rights to participate in the bidding process for the video lottery facility at the Aqueduct Racetrack.

GTECH Corp, a wholly-owned subsidiary of Italian gaming company Lottomatica SpA, was likely the preffered bidder to negotiate for a seven-year contract with the New York Lottery to provide new online lottery solutions and services, and an option to be extended for three more years. GTECH had been a lottery technology and services provider to the New York Lottery since 1986.

The New York video lottery business is estimated to be worth over US$550mil over the contract period.

Genting NY chance of winning is at best hopeful? due to the video lottery facility required a different skill set and proven track record in running it.

Genting Malaysia already had a lot on its plate, such as ensuring its recently constructed Singapore casino operations, via 51.8%-stake in subsidiary Genting Singapore Plc, was profitable.