A Native American tribe planning to develop a casino in Massachusetts in the United States – a venue slated to be run by Asian gaming firm Genting Malaysia Bhd – has suspended its request for the federal government to review whether it is entitled under U.S. federal law to sovereign land. It wants to build its casino on land designated as such.
The Mashpee Wampanoag tribe said instead that it would resume its judicial appeal against a group of residents opposing its plans for a US$1-billion casino resort (pictured in a rendering) in Taunton, a settlement 64 kilometres (40 miles) south of Boston.
Genting Malaysia was to manage the casino for at least seven years from the opening of the property. The casino operator had said that while it had no equity interest in the project, it had invested in interest-bearing promissory notes issued by the Mashpee Wampanoag Tribal Gaming Authority for the initial development phase of the casino resort.
Japanese brokerage Nomura said it viewed the latest development related to the tribal casino as “negative”.
“However, at this juncture, it appears Genting Malaysia will not need to impair its [about] MYR1.4-billion [US$325.9-million] investments made over 2012 to 2016 in the tribe’s promissory notes and capitalised interest, as the legal appeal might take a few quarters to complete,” said analysts Tushar Mohata and Alpa Aggarwal in a note on Wednesday.
“But in case the courts reject the appeal, Genting Malaysia might need to make impairments in the future,” they added.
Nomura suggested that even in the worst-case scenario there shouldn’t be a negative impact on cash flow in fiscal year 2017, “as all the investments have already been made over the last four years progressively, with the bulk made in 2016, before the lawsuit”.
But the brokerage noted that if Genting Malaysia needs to impair its investment, the casino operator’s earnings “are likely to fall by approximately MYR120 million annually, as Genting Malaysia will stop recognising interest income from the notes”.
Genting Malaysia – part of Malaysian conglomerate Genting Bhd – runs Resorts World Genting, Malaysia’s only casino resort, and operates casinos in the United States, the Bahamas and the United Kingdom. The firm operates Resorts World Casino New York City, which opened in 2011.
The Genting group is currently developing Resorts World Las Vegas in Nevada, United States, aiming for a 2020 opening.
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Japanese brokerage Nomura