KUALA LUMPUR: Shares in Genting Malaysia Bhd climbed marginally in early trade Wednesday after its associate Empire Resorts Inc won a licence to offer mobile sports betting in New York.
The gaming and leisure group added one sen to RM3.21 at 9.10am. Year-to-date, it has risen about 19%.
Genting Malaysia had last month announced to Bursa Malaysia that its 49%-owned associate, Empire, submitted a bid for the sports betting licence in New York as part of a consortium known as Sports Information Services Ltd.
The New York State Gaming Commission has chosen a total of eight platform providers and nine operators for the mobile sports betting licences.
Empire Resorts had entered into a joint bid consortium with technology provider Kambi Group plc to provide and maintain the mobile sports betting platforms, while Empire Resorts, along with the other gaming companies in the consortium, including Caesars Entertainment Inc and Wynn Resorts Ltd, will operate the platform similar to operating conventional casinos, as it stated in the commission's document.
CGS-CIMB Research expects this to mildly boost Genting Malaysia’s earnings, mainly through narrower losses for its 66%-owned Empire Resorts.
“The latter is expected to receive a US$5mil (RM21mil) per annum fee to host the platform provider’s servers (as they are required by the constitution to be located physically within upstate casino properties).
“In terms of the mobile sports betting business, we believe there may not be substantial profits to be made due to the very high 51% tax rate,” it said.
“While industry consultants and lawmakers have estimated that mobile sports
betting in New York could potentially generate some US$20bil in handle upon
stabilisation (possibly by 2025-26), the net gaming revenue (NGR) to operators may only be US$600mil-US$800mil (based on 6-8% typical hold rate and after applying 51% gaming tax).
“Assuming this is equally split between operators, the NGR per operator would be US$65mil-US$90mil per annum (and even lower in the initial years), with minimal profits left after factoring in promotion/marketing and running costs,” it added.