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Foreign group goes big on bid to bring Vegas-style casino to New York

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TUXEDO, N.Y. » As New York state considers a roulette wheel’s worth of options for how it should enter the Las Vegas-style casino business, none is as audacious as the proposal of a Malaysian conglomerate called Genting Group.

Here, on an old landing strip carved out of a hillside in a dense forest 44 miles northwest of Manhattan, the company is seeking to build an eye-popping complex with 1,000 hotel rooms and over-the-top entertainment for every taste and season: theaters, restaurants, ski runs, formal gardens, zip lines — even a refurbished Renaissance village.

Its proposal is also far and away the richest. And unlike its rivals, who are either relatively untested or groaning under enormous debt, Genting is working with $6 billion in cash and 40 years of experience, including more than two decades in the United States.

And the spot it has chosen, an easy drive from the George Washington Bridge, puts it the closest of any proposed casino to the most well-heeled and tightly packed reservoir of potential customers in the country: New York City, with 8.4 million residents and 50 million tourists a year.

All of which suggests its proposal could do more than any rival’s to create jobs, generate upstate taxes, capture the imaginations of bettors who would otherwise burn through their bankrolls in other states — and quickly become the dominant force in what is an already crowded gambling market on the East Coast.

"How can you say no to that?" said Chad C. Beynon, a gambling analyst at Macquarie Securities Group. "How can you honestly pick someone else?"

Yet for the officials Gov. Andrew M. Cuomo has put in charge of choosing up to four upstate winners from the field of 16 applicants, no aspect of the decision-making will be as fraught as whether to let Genting open a casino in Tuxedo.

Conservationists are in revolt over the damage they fear such a huge gambling mecca would do to the pristine, publicly owned woodlands surrounding the Tuxedo site. Officials an hour to the north, in the Catskills, are warning that a casino so much closer to the city would divert all the gamblers they had hoped to attract, dooming their ailing region’s chances of economic revival.

Awarding a license to Genting, whose relationship with the governor has been up and down, would also expose Cuomo, a Democrat seeking re-election this year, to criticism on grounds of fairness. The company already operates a crowded slot-machine parlor next to the faded Aqueduct racetrack in Queens — which, unlikely as it may seem, has quietly become the busiest casino location in North America. Adding the Tuxedo site would only consolidate its commanding position atop New York’s gambling industry, competitors say.

"How many licenses are they going to give to one company?" said Jeffrey Gural, a rival developer.

To overcome those obstacles, Genting has tried to make its offer so rich that New York state will be unable to refuse it.

The company has committed to invest at least $1.5 billion in its development. It has offered the state government a lump-sum license fee of $450 million — more than six times the $70 million requirement. It has promised to build a $30 million highway interchange to bring visitors to its front doors. It says it will generate $400 million a year in state and local taxes, much of it for education, and has proposed to turn over another 6 percent of its slot-machine revenue — a projected $30 million a year — to benefit New York’s state parks.

Genting’s venture, like New York’s entire casino strategy, faces stiff headwinds. The gambling market in the Northeast is already approaching saturation, but is growing only more competitive: Atlantic City casinos are closing, but New Jersey is considering allowing slot machines in the Meadowlands or Jersey City, a few miles from Manhattan.

So a $1.5 billion investment in Tuxedo could be impossible to recoup quickly. And there is a ticking clock: The law authorizing new upstate casinos also allows three more to open in New York City and its suburbs after another seven years — at which point it gamblers would not have to head upstate at all.

"The winner may be the loser from an investment standpoint," said Beynon, the analyst.

Genting acknowledges the hostile environment, but contends that it is uniquely capable of flourishing in New York in spite of it, thanks to an international database of 12 million customers, including more Asians than any rival: It runs the busiest casinos in Malaysia and the Philippines and a hugely profitable one in Singapore.

"The magic is that New York’s already an attraction," said Christian Goode, a Genting executive. "Asian customers are already coming here for shopping, to take their kids to school, or for a holiday. Our destination will complement those trips: You can still enjoy the museums, the shopping, the restaurants in New York City — and go to a five-star-plus resort with a world-class spa, a ski slope and hiking. We’ll provide everything from shuttle buses to limo service."

A Gold Mine in Queens

The highest-grossing casino in America is not in the Nevada desert, on the beaches of Atlantic City or in the woods of eastern Connecticut. It is in a hardscrabble neighborhood near Kennedy International Airport in Queens, where in 2011, Genting opened Resorts World New York alongside Aqueduct’s rusty grandstand.

Step inside the casino’s soaring lobby, with its three-story chandelier and two shiny Cadillacs advertising the latest giveaway, and the audible hum-ding-buzz of electronic slot, roulette and baccarat machines signals the real action, just up the escalators.

At 3 p.m. on a steamy New York weekday, 4,000 men and women have parked themselves in air-conditioned comfort in front of those video screens, betting — and mostly losing — as much as $50 a game. Their numbers double or triple by nightfall.

"This place is making crazy money," said a young emergency-room nurse from Brooklyn who declined to give his name but said he came twice a week, spending as much as $600 a trip. "I won $2,000 once. Then you put it right back."

Resorts World generated $792 million in revenue (and more than half a billion dollars in taxes) last year, all from electronic machines. That is more money from gambling than at the Bellagio, or the Venetian, or any other full-fledged casino in America in 2013, said Robert J. Shore, a gambling analyst at Union Gaming Group, whose consulting arm does work for Genting.

"Amazing numbers," he said.

It was also the culmination of a decadeslong effort to gain a major foothold in the United States.

Genting had its origins in the construction of a mountaintop resort, casino, theme park and shopping mall outside Kuala Lumpur beginning in the 1960s and ’70s. Today it is the largest casino operator in Britain, not just in Asia, and has interests in energy, biotechnology and cruise lines.

It surfaced in the United States in 1990, when it agreed to finance the Pequot tribe’s construction of what became Foxwoods in eastern Connecticut — the first of several investments in Native American casinos.

Genting’s U.S. forays did not always succeed, but they grew increasingly bold.

In 2011, it made a $500 million bet that Florida would authorize megacasinos, scooping up a 30-acre site on Biscayne Bay in Miami. It hired two dozen lobbying and public-relations firms, donated $600,000 to politicians and promised to subsidize 12 new flights from Asia. But Disney World objected, and Genting’s too-much, too-fast approach scared off the elected officials whose support it needed, analysts said.

Genting had to settle for a casino complex a 90-minute boat ride away in the Bahamas, where it opened in 2013.

The company made an even bigger play on the Las Vegas Strip last year, when it paid $350 million for the site of the old Stardust casino, where it says it is building a $4 billion Chinese-themed resort.

But nothing would vault Genting into the forefront of the industry like winning the opportunity to run a full-fledged casino a short drive from New York City.

Embarrassment to Cuomo

For the Cuomo administration to award Genting a casino license in Tuxedo, it would have to look past its own complicated relationship with the company.

By the time the governor was elected in 2010, Genting had already been awarded the state franchise for what became Resorts World New York.

A year later, Cuomo strongly embraced the company and its aspirations. He came out in favor of a plan to legalize full-scale resort casinos outside tribal lands as an economic-development strategy. And he made an ambitious proposal for a joint venture with Genting to build a new convention center at Aqueduct, allowing the state to close the Javits Center and redevelop a large stretch of Manhattan waterfront.

But the joint venture became a debacle and ruined the company’s relationship with Cuomo.

The Manhattan-centric hotel industry, it turned out, opposed a Queens convention complex. There was no fast way for conventioneers to get to the site from Manhattan. And Genting was demanding assurances that its investment would be protected from a rival casino’s opening elsewhere in the city.

Months later, the proposal was dead, and an embarrassment: Genting executives said they had not expected Cuomo to mention what they saw as only an idea, while the administration accused the Malaysian company of reneging on what it called a "done deal."

Then, news articles in 2012 revealed that the joint-venture idea had been hatched at a fundraiser for Cuomo — and that Genting and a trade group it founded had donated $2.4 million to a political group closely allied with the governor.

Genting quickly became persona non grata in Cuomo’s office. Even this year, it took the intervention of Peter Ward, the powerful hotel-workers’ union leader, to get the company a meeting with the governor’s aides in June to renegotiate its deal.

Given that history, Genting is taking no chances in pursuing a casino license in Tuxedo.

Its $1.5 billion proposal for a resort employing 4,000 people, surrounded on three sides by Sterling Forest, is $500 million bigger than the second-largest bid out of the 16 received by the New York state Gaming Commission.

That $1 billion bid — in Montgomery, a village in Orange County to the north of the forest — is also backed by Genting.

Like a gambler covering a craps table with chips, Genting’s chairman, Kok Thay Lim, is also involved through a family trust in a third proposal: for a $750 million casino in the Catskills, roughly 90 miles northwest of New York City.

Catskill officials have feared that the granting of a casino license in Tuxedo, Montgomery or elsewhere in Orange County would wreck their region’s hopes of attracting a viable casino resort, and the sorely-needed jobs and taxes it would bring.

But Goode said the 238-acre Tuxedo project would deliver the greatest economic impact and the best chance for success.

Environmental Concerns

At its promotional office next to the Tuxedo public library, a video also promises that residents will see only "minimal impact" on Sterling Forest.

Environmentalists say otherwise.

"I think it’ll be the undoing of a lot of our work," said Mary Yrizarri, 82, widely regarded as the matriarch of the decadeslong movement to turn what was once a privately owned forest, where developers wanted to build housing, into a 22,000-acre state park instead.

Yrizarri and her husband, John, an illustrator and naturalist, are working with the Sterling Forest Partnership, which has filed a lawsuit claiming that the town improperly rezoned the area for a casino.

The existing Tuxedo Ridge ski center and Renaissance Faire are minor nuisances, Yrizarri said in an interview at her cottage five minutes from the proposed casino site. A resort that promises to draw 19,000 people a day, every day, is another matter.

The National Resources Defense Council and the New Jersey Sierra Club have come out against the project, saying it threatens the watershed that supplies drinking water for both states.

"It cannot help but radiate into the forest in ways that’ll hurt the wildlife," said Roger Friedman, president of the Sterling Forest Partnership.

Goode said Genting would make every effort to mitigate those effects, knowing that the forest’s natural beauty was part of the attraction.

But a battle could prove bruising for the company and for the governor.

Gov. George E. Pataki, a Republican, earned accolades from conservationists for having New York state putting up most of the money to buy Sterling Forest. Cuomo, whose environmental record has been mixed, now risks alienating the same groups.

"It took $100 million to buy Sterling Forest," said Carol Ash, a longtime conservationist who helped Pataki acquire the land. "It’s inappropriate to now say that they’re going to put the equivalent of a new city in the middle of the forest."

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