Wall Street Journal: Dreaming of a New Vegas in Miami
Nov 30, 2011
The following article was published in the Wall Street Journal on November 29, 2011:
MIAMI—A Malaysian gambling company wants to build what could be the world’s largest casino on prime land along Miami’s waterfront. It has spent about $450 million on real estate, pledged to help rebuild part of an interstate highway and hired 23 lobbyists to press for a new Florida law.
The focus of Genting Bhd.’s costly campaign is a proposed $3.8 billion casino resort with six towers, 50 restaurants and a shopping mall overlooking Biscayne Bay. Florida state law largely limits casino gambling to resorts operated by Indian tribes and slot machines at horse- and dog-racing tracks.
Genting’s land purchase and lobbying appear to have helped revive a push for new casinos that appeared moribund when the state legislature adjourned in May. But some politicians and casino-industry insiders worry that by coming on too strong Genting could sink the effort to expand gambling in the state.
Last month, state lawmakers introduced a bill that would authorize three new casinos in South Florida’s Miami-Dade and Broward counties, which Genting hopes will allow it to gain a gambling license.Corp., another gambling company seeking to enter the state, argues that three casinos are too many for the area and backs a plan to add just one or two.
“We think everything is lined up, and this is going to go forward,” said Christian Goode, Genting’s chief financial officer in the U.S. “We want to be a player.”
The company, whose holdings include a $4.7 billion casino in Singapore, has seized the chance to expand in the U.S. as more states consider opening up to gambling in hopes of shrinking their budget deficits and unemployment rolls. Genting is flush with cash from Asian operations, while many of its U.S. rivals have been hobbled by heavy debt.
Last month, Genting opened a new slot-machine casino at Aqueduct Racetrack in New York’s borough of Queens. In Massachusetts, where the governor signed a bill last week that would authorize the state’s first casinos, Genting affiliate Kien Huat Realty has formed a partnership with an Indian tribe that has a good chance of getting one of the new gambling permits.
In Florida, however, some political and business leaders say the company’s highly public campaign, a departure from the behind-the-scenes approach the gambling industry typically prefers, risks galvanizing the opposition, which includes many social conservatives and business interests, including Walt Disney Co. and the Florida Chamber of Commerce.
“It certainly does appear that Genting has taken a full-frontal-assault approach to lobbying the issue,” said Dean Cannon, the socially conservative Republican speaker of the Florida House and a key figure in the casino debates. “Whether that strategy inures to their advantage or disadvantage remains to be seen,” added Mr. Cannon, who hasn’t declared his intentions toward the bill but has said he is wary of wider gambling in the state.
Genting’s cash-rich status gives it an advantage over many overburdened U.S. casino operators, who embarked on building sprees or leveraged buyouts just as the casino market in the U.S. began to sour. The company, which grew out of a single casino in Malaysia but now has holdings in a range of industries, reported $3.4 billion in profit last year on $15 billion in revenue.
Genting startled competitors in May when it said it had paid $236 million in cash for the Miami Herald’s waterfront headquarters and planned to build a casino there, if it secured approval. Under the deal, the newspaper will be able to stay in the building rent-free for two years.
In September, Genting gained control of the $206 million mortgage on the adjacent Omni Center, doubling its footprint.
Several casino-industry insiders said they believe this could be the first time in the U.S. that a company has bought land for a casino that hasn’t yet been authorized by law, rather than leasing or taking an option on it.
“It surprised us all that they were so far out in front with the land purchase given still the level of uncertainty in Florida,” said Tim Wilmott, chief operating officer at, who has conducted pro-casino campaigns around the country.
Genting also hired a slew of high-priced lobbyists and public-relations consultants. State lobbying disclosure forms list 23 lobbyists working for four different Genting entities. Its competitors are conducting somewhat quieter campaigns. Las Vegas Sands hired eight lobbyists, whileLtd., listed as Development Associates in state records, has hired four.
Among the heavyweights Genting has enlisted are Lincoln Diaz-Balart, a former congressman, and Harkley Thornton, a close friend of Mr. Cannon, the House speaker. According to state records, the company also has contributed $186,000 to the Florida Republican Party, which controls the legislature and the governor’s office.
Mr. Goode said Genting is trying to strike a deal with the Adrienne Arsht Center for the Performing Arts, which borders the proposed casino site, for a long-running show to accommodate the resort’s guests. Genting would back the show with a guarantee to buy a block of tickets.
Genting also has offered to build a parking garage for the arts center and help to overhaul the outdated interstate adjacent to it, said Mike Eidson, chairman of the Performing Arts Center Trust.
Genting says its resort would bring thousands of jobs to Miami-Dade, where unemployment is 10.7%, and a new source of tax revenue to a state facing what could be a multibillion-dollar budget shortfall next year.
Yet as the casino debate has heated up, local leaders are increasingly questioning the resort’s size, its impact on traffic and its potential to siphon revenue away from local businesses.
Among the interests mobilizing against the casino bill’s passage are the Florida Chamber of Commerce and Disney, which has historically opposed attempts to expand gambling in the state and whose theme parks in Orlando could face a competitive threat from new casinos. Among other things, opponents fear the new casinos could tarnish Florida’s family-friendly image.
Genting’s “strategy appears to be just layering dollars on top of dollars,” said Mark Wilson, president of the Florida Chamber, adding that the company offered his organization a five-figure contribution, which it declined. “I think the bet they made was that Florida was for sale. That’s a big gamble.”
Genting’s Mr. Goode said the company expects its dealings in South Florida to pay off regardless of the gambling bill’s fate: “We think we got great value.”
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