|Can Malaysians complete Echelon, Las Vegas' boulevard of broken dreams?|
After besting Las Vegas in 2006, Macau has long since left the US gaming destination in the dust. Today, Macau's betting revenues are some seven time greater than those of Las Vegas. Asian high rollers have largely deserted Las Vegas for Macau and other nearby Asian destinations. In the wake of the US subprime crisis, there were consequently many stalled developments in Sin City. While Las Vegas gambling revenues are not falling precipitously alike, say, Atlantic City, they are not growing either.
Hence the deal: why not make the cash-laden Asians "fix" Las Vegas? Actually, it's already happening. A year ago, the Boyd family of Stardust fame sold its stalled mega-development Echelon (pictured above) to Genting, a Malaysian firm that has the sole gaming license in that Asian country. Thinking big, Genting is betting that it can bring the Asian clientele back to Las Vegas with an Asian casino operator. Far fetched? Genting is upping the ante to the billions of dollars...or is saying so at least:
Genting Bhd, Southeast Asia's biggest gaming group, will spend an initial $3 billion to $4 billion to develop an unfinished resort on the Las Vegas strip, as it seeks to build a U.S. empire of casino and leisure assets. The Malaysian company is seeking to expand in the United States as the world's largest economy starts to recover, and as various states relax restrictions ranging from casino licenses to online gambling. Genting, which has held Malaysia's sole casino licence since the 1960s, has focused its international expansion drive on the United States. It opened a casino in New York City in 2011 and has since bought upmarket waterfront properties in Miami.Let's just say Genting has doubters aplenty. It had something planned for Miami, but it has not yet borne fruit. Still, there may be enough money to be made in Vegas to swing the deal there:
Genting bought the Las Vegas resort this year from Boyd Gaming Corp for $350 million, in its first push into the U.S. gambling mecca dominated by the likes of Las Vegas Sands. Construction of the resort was suspended in 2008 after the onset of the global financial crisis. "We are looking at $3-4 billion in total if we get approval for a casino licence (in Las Vegas)," Chief Executive Officer Lim Kok Thay, who was widely credited with Genting's global expansion, told reporters.
There are also painful memories of Genting’s first foray into Miami in 2011, when it announced the development of a $3.8bn resort on 30 acres of land downtown. While the Resorts World Omni hotel that was to form the core of that resort still exists, the wider project never materialised, partly due to opposition from rival existing hotel businesses, analysts say...We'll see. Genting seems ready to shuffle up and deal.
While gaming revenues in Asia are expected to grow by almost a fifth each year to 2015, according to PwC, against 5 per cent growth in the US, he argued that a US push made sense as long as rates of return were above Genting’s cost of capital. “This year stands to be a very exciting year for them because a number of things might come good. In two or three years’ time people are going to realise these guys are formidable competitors,” Mr Pinge said.