KUALA LUMPUR (Nov 10): Empire Resorts Inc, in which Genting Malaysia Bhd (GENM) has invested US$524 million over the past two years to revive its financial health, has sprung a positive surprise.

The casino operator has won a licence to offer mobile sports betting in New York.

The New York State Gaming Commission has chosen a total of eight platform providers and nine operators for the mobile sports betting licences after a year-long selection process.

New York expects the state's mobile sports betting business to generate up to US$99 million in the first year and reach up to US$500 million by 2025, the state government was quoted by Bloomberg as saying. Meanwhile, New York state is imposing a tax rate of 51% on gross gaming revenue for 10 years.

The bidding of the licence began last year amidst the Covid-19 pandemic when the New York regulators issued a request for applications for the mobile sports betting licence in July 2021 after obtaining relevant legislative approvals within the state.

Last month GENM announced to Bursa Malaysia that Empire Resort had submitted a bid for the sports betting licence in New York.

The bidding for the mobile sports betting licence requires a platform provider as the primary applicant and several other operators which hold a gaming licence, according to the document on the request for applications posted on the New York State Gaming Commission's official website.

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.

Investment analysts see the sports betting licence to be a good catalyst for Empire Resorts' earnings prospects.

Analysts are expecting a bigger win in New York. Maybank Investment Bank Research recently commented that GENM's wholly-owned subsidiary Resorts World New York City was in a good position to win a New York casino licence, which might be able to generate an estimated annual net profit of US$145 million (about RM610 million).

Maybank's analyst Yin Shao Yang said after a four-month delay, the New York State Gaming Commission launched a request for information (RFI) for three downstate commercial casino licences.

Still, nothing beats its operation at home so far. GENM's outdoor theme park Genting SkyWorlds Theme Park is conducting technical rehearsals, raising expectations that it will open to the public soon. Analysts anticipate this to help draw visitors to the hilltop casino.

"We are conducting technical rehearsals for employees and selected guests," a GENM spokesperson told The Edge on Monday.

In 2019, GENM bought the equity stake in Empire Resorts from its controlling shareholder Tan Sri Lim Kok Thay, who is also the deputy chairman and chief executive, for US$128.6 million cash or RM538.8 million. Besides, GENM has to participate in the company's massive recapitalisation exercise. The related party transaction sent its share price on a downhill.

GENM's share of losses in associate Genting Empire Resorts LLC, the holding company of Empire Resorts, amounted to RM285.1 million in the financial year ended Dec 31, 2020.

The losses included share of Empire Resorts' operating loss of RM58.8 million, financing costs as well as depreciation and amortisation of RM226.3 million. Empire Resorts' operating performance was adversely impacted by the temporary closure of Resorts World Catskills (RWC). RWC resumed operations with reduced capacity in early September 2020.

In the financial year 2019, the group recognised a share of loss of RM31.6 million upon the completion of the acquisition of Empire Resorts in November 2019.

GENM's overseas ventures have yet to yield meaningful returns since its first major venture in the UK more than 10 years back. Will Lady Luck smile at GENM this time given its expansions in New York?