Thu | Jun 29, 2017

Rethink casino requirement

Published:Monday | December 8, 2014 | 12:00 AM

Rethink casino requirement

It is 15 months since the Government invited requests for proposals for casino licenses integrated in resort developments which, for successful bidders, would also mean licences to operate casinos. It initially received four tenders.

Yet, the administration has, up to now, been unable to offer any licences, or name preferred bidders. This you would have expected to be easy after one of the bidders was disqualified and another voluntarily withdrew, plus the fact that the law gives the Government the right to name up to three licensees.

We would be surprised if anything of substance happens anytime soon with the remaining bids: by Harmonisation Limited, an entity in which the Government is a shareholder, and Celebration Jamaica, led by Robert Trotta, who was behind the troubled Palmyra development at Rose Hall, St James.

And we don't believe that if the Government makes another or new request for proposals for casino developments, there will be any stamped by potential investors to Jamaica.

First, having procrastinated for decades on the business of casino gambling, Jamaica is coming to the market late and is doing so in, if not bad, not-so-great economic times for the industry. Casinos are yet to fully recover from the hits it took with the global financial meltdown of 2008. But more important, Jamaica is overambitious in what it is demanding of developers who want licences to operate formal casinos in the island.

The law requires that for anyone to get any of the up to three geographically exclusive licences, the casino has to be part of the integrated resort that includes at least 2,000 hotel rooms, none of which can be in existence or under construction prior to the application. Those rooms can be spread over one or more hotels, and half of them should be ready prior to the start of the casino operations.

Or put another way, a casino has, by and large, to be part of a greenfield development. An existing property can't be enlarged to embrace a casino, although it appears hazy whether a hotel that may have been inactive for a long time could be refurbished and expanded to meet the criteria of the integrated resort.

The larger point is that these requirements are not attractive, in the first place, in respect to Jamaica, or globally. Indeed, since the collapse of global foreign direct investments (FDI) towards the end of the last decade, Jamaica had showed only modest recovery on all fronts. And in any event, but for a few countries, there is not a lot money sloshing around, seeking home in hotels and casinos. Although it is possible that Chinese banks may now be onboard, it is more than a decade and a half that the Government has struggled for partners/capital for Harmonisation Ltd's project at Harmony Cove in Trelawny.

Our suggestion to the Government is that it review its policy and put in place more realistic requirements for integrated resort licensees. These could include allowing existing hotels that meet a threshold for rooms and geographic zone to bid for licences on the basis that these will be increased to the projected minimum for such resorts. Holding out for everything might get you nothing.