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Genting's Spectacular Promises for the Economic Potential of Multi-Billion
Dollar Mega Resorts in Miami May Have Killed Their Own Case

The Resulting Cannibalization of Existing Facilities Could be Devastating

By Mary Ellen Klas and Douglas Hanks, The Miami HeraldMcClatchy-Tribune Regional News

Nov. 17, 2011--TALLAHASSEE -- In the debut debate over the resort casinos bill Wednesday, the head of Genting Americas offered legislators glittering promises and pitches -- from guaranteeing non-stop flights between Asia and Miami, to $1.7 billion in new revenue to the state, to the purchase of thousands of Disney World tickets for resort patrons.

But the sales job, including the creation of 100,000 jobs, seemed "over the top" to the Senate sponsor of the bill and even to some of the Las Vegas companies that also want a piece of the action. The bill's sponsor said Genting's presentation may have backfired on the company.

"They actually kill their own case because, based on what they want to do, they're going to put all the pari-mutuels out of business and every restaurant in Miami -- and a couple hotels too,'' said bill sponsor Sen. Ellyn Bogdanoff, a Fort Lauderdale Republican, after the meeting of the Senate Regulated Industries Committee. Genting's numbers for the economic potential of three $2 billion mega resorts proposed in her bill, she said, "are over the top."

During the two-hour committee workshop, potential competitors to Genting took aim at the company's spectacular claims, and some took a swipe at the Bogdanoff's bill as well. The bill calls for allowing three giant resort casinos to be built in Miami-Dade and Broward counties.

Donn Mitchell, chief administrative officer for Isle of Capri Casino in Pompano, told the committee that unless the proposal allows Florida's existing pari-mutuels to operate the same games with the same tax rate as the new casinos, the industry will die and Florida will lose 15,000 jobs and $154 million in tax revenues.

"There is going to be significant cannibalization of existing facilities," Mitchell warned. The Seminole Tribe, faced with new competition for its convention and out-of-state business, "will turn against the weaker competitor" and aim to peel off business from the pari-mutuels, he said.

Las Vegas Sands Vice President Andy Abboud, whose company is interested in bidding for a casino resort license if the bill is approved, agreed there would be market saturation with three mega resort casinos and urged legislators to take a "cautious, go-slow approach."

Colin Au, president of Genting Americas, presented committee members with a one-page summary of an economic study the Malaysian-based company commissioned. The study forecasts total gambling revenue from three mega resorts at between $4.3 billion to $6 billion a year. By comparision, the Las Vegas Strip, long considered the hub of American gambling, generated $5.7 billion last year, according to the Nevada Gaming Control Board.

Abboud raised doubts about the wide disparity between Genting's numbers and a preliminary report by state economists last week that projected that the total gaming revenue generated by the three resorts would be closer to $980 million a year.

"That's an incredible variance,'' Abboud said, urging lawmakers to study the numbers carefully. "I am not here to sell you on anything. I'm not here to make promises I can't deliver."

The debate offered a glimpse into the substantial doubts and political hurdles the resort-casinos bill faces in the traditionally gaming-averse Legislature.

Amid the mounting criticism, Au dismissed complaints that the 19,000 gaming jobs his company promises to bring to Florida will actually go to workers from Atlantic City or Las Vegas or that the hotels will fold under the weight of competition.

"That's bulls---," he told the committee with characteristic bluntness. He repeated the phrase again during his 20-minute presentation.

Au told lawmakers the industry will produce revenues of $9 billiona year, he said. It will create 50,000 construction jobs and 100,000 permanent ones. It will contribute $1.7 billion in annual revenue to the state, expand the state economy by 5 percent, "maximize benefits for everybody" and build the most "iconic architecture" on the planet.

"We will guarantee half the seats of non-stop flights from the Asia Pacific,'' Au said. "I'm even prepared to guarantee Disney 100,000 tickets that we will sell for them in our resort."

Sen. Nan Rich, a Weston Democrat, asked Au how he knew that the South Florida market could sustain three mega casinos.

Au compared the area to Singapore, a city-state about the size of South Florida where the presence of two casino resorts has resulted in an exploding economy and a casino market that relies on out-of-state tourists for 70 percent of its clientele.

"I can assure you, Senator, when we are up and running, you will find the impact of these three destination resorts to be even larger than Singapore,'' he said. "We do not eat people's lunch. We create lunch, dinner, breakfast for everybody."

To prepare for the debate, Genting hired Spectrum Gaming Group and Union Gaming Analytics to review the market potential for bringing three casino resorts to South Florida.

Spectrum managing director Michael Pollock told The Miami Herald that the study was based on three resorts the same size as Genting's proposed Resorts World Miami -- making each the world's largest. Pollock noted the numbers are based on casinos opening in South Florida several years from now and their focus on persuading wealthy Asians to travel to Miami.

But Mark Nichols, an economics professor at the University of Nevada, Reno, told The Herald that he doubted Asians will fly around the world in large numbers for a Miami casino trip, since there are so many options closer to home.

"I believe Miami would be a bit of a stretch for the Asian market,'' Nichols said. "You already have mega casinos open in Asia now. They have siphoned off a lot of the Vegas business. And you still have a large number of Asians flying to Vegas."

Bogdanoff said she worries that Genting appears to be "overpromising.'' She urged the company to scale back its plan for 5,200 hotel rooms to a more modest 750, and added she believes that the $2 billion pricetag for its glitzy architectural rendering is a severe underestimate. "It's beautiful and it's sparked a conversation,'' she said, "but I'd like them to tone it down and be realistic."

The committee is scheduled to hold a second workshop on the issue in December and take a vote on the bill during the first week of the legislative session in January.

Mary Ellen Klas can be reached at meklas@MiamiHerald.com and on Twitter @MaryEllenKlas.

___

(c)2011 The Miami Herald

Visit The Miami Herald at www.miamiherald.com

Distributed by MCT Information Services



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