Government sources told the press that representatives of major American casino operators MGM and Caesars, as well as Malaysian and Macao companies, Genting and Kezner, have visited Cyprus more than once.
They have met with officials and landowners, have done their due diligence and, when the time comes, sources say they would be surprised if the parties passed on the opportunity to expand their business in Cyprus.
Parliament started discussing the relevant legislation on May 14 and the government is expecting a fairly speedy process that will allow the licensing procedure to be completed by the end of the year. If parliament approves the bill in June, investors will get a month to evaluate it before expressing interest. The relevant authorities believe that about 15 companies could take part in the bidding process and the five strongest bids will be selected from this pool.
After the licence has been granted, it will take about two-three years to build the casino resort. According to the pending legislation, the operator will have the choice of building a temporary casino construction within the year to start having returns on their investment as soon as possible.
The frontrunners
From all the companies having expressed an interest to build a Cyprus casino, the government has picked four as the potentially more serious ones.
MGM, the Las Vegas giant casino operator sent representatives in the official consultation, but then took a back seat. Sources close to the process told the Cyprus Weekly that this seemingly low interest could be a smokescreen by MGM not to reveal their cards. Another Las Vegas player is Caesars Entertainment Corporation, whose interest is more open. Insiders told the Cyprus Weekly that at the beginning there was some concern for the above company, as it was revealed that Caesars has been monitored by US authorities under Chapter 11 company laws, referring to troubled companies needing urgent loan restructuring.
Due diligence revealed that Caesars is not a single business entity. It consists of four different companies and the subsidiary interested in Cyprus is very profitable. Only last year it made about $4 billion gross worldwide.
Another prospective investor is Genting, a Malaysian operator with extensive casino interests in Shanghai and Macao. Genting has also come to the island, met with all the right people and established local representation. Genting is a very profitable company, willing to significantly invest its own capital on the island. That is not the case with other operators, who will also be looking to attract other investors, possibly hedge funds, to share the financing and building of a casino resort.
Finally, Kezner is a smaller but also experienced company with headquarters in Macao, the ‘Las Vegas of Asia’. The company has a different business model, focusing more on entertainment than gambling.
On private land
The government has made clear that the casino will be built on privately owned land. This fact creates a huge opportunity for owners who have large pieces of land available. They are being encouraged to talk to potential operators and attract their interest.
The press understands that through their representatives, the major potential casino bidders have already seen areas in Limassol and Larnaca.
All major landowners have expressed interest to do business with a casino operator. Over the past months, the names of Galatariotis, Shacolas, Lanitis Lefkaritis and Leptos have been discussed in economic circles as potential players in the casino project.
We understand that prospects for a Shacolas-Lanitis joint venture are looking up, although the foreign investor will have the final say. Right now, it’s too early to take final decisions, and investors seem to be mulling between having a gambling resort in an isolated area or to build it in the heart of an already busy tourist location.
Legal framework
The government is assured that parliament won’t attempt any major changes to the casino legislation currently being scrutinised by the House Commerce Committee. At the beginning of the process, there was talk of placing gambling tables in other hotels, creating small casinos in various areas of the island.
This idea was abandoned, though, when it became clear that such a plan would dilutethe project and discourage big investors to get involved. The idea of banning smoking in the gaming areas suffered a similar veto, a decision that would have made Cyprus a no-go area for major casino operators.
Source: InCyprus
