No capping of number of casino concessions – Minister

A policy under the former Nationalist administration to limit the number of casinos on the island to five concessions, has been effectively jettisoned by the Labour government.

Economy minister Chris Cardona yesterday told MaltaToday that there was now “no capping” to the number of casinos that can be established, after the ministry issued two concessions to the Eden Leisure Group and Dragonara Gaming Ltd following an expression of interest for a new Malta-based casino.

The process has been halted by court order following a protest filed by Dragonara, which is contesting the Privatisation Unit’s decision to rank Eden Leisure first in the selection process, and the decision to grant two concessions.

“There is no capping to the number of casinos, we want to fully maximise this growing industry,” Cardona told MaltaToday when quizzed about the limit on casinos.

“This is a discretionary issue and we can increase the number of casino licences,” Cardona said.

Cardona however refused to comment on a decision to issue two licences for casinos from a competitive tender that was originally intended to offer one casino concession in Malta, and another in Gozo. No bids were submitted for the Gozo concession.

He said he would not comment on the matter due to court proceedings instituted by Dragonara Gaming Limited, which is owned by entrepreneur Michael Bianchi and Johann Schembri.

Cardona said that he would not comment on the injunction order, but when quizzed he said that he did not rule out an out-of-court settlement.

Dragonara Gaming went to court last week to stop the Privatisation Unit from issuing a licence it granted to Eden Leisure Group, as the first-ranked bidder in the expression of interest, after a technical committee chose the group on the strength of a 10-year business plan.

The second licence was awarded to the Dragonara Gaming, which already runs the 10-year concession

on the Dragonara Casino, which offered an up-front cash advance of €4 million. Dragonara Gaming say it is €3 million more than the cash offer from Eden Leisure.

But in spite of being offered a ‘negotiable’ licence, the Dragonara owners still instituted legal proceedings against the government.

“We have challenged what is evidently a vitiated selection process for the award of a concession to open and operate a new casino in

Malta. On November 17, 2014, in court, we shall deliver the necessary submissions that need to be

made and to bring our evidence on the vitiation of the process. We are totally committed and determined to exhaust all remedies available to us,” Dragonara’s business development manager Franco Degabriele said.

Eden Leisure managing director Ian Decesare told MaltaToday that his group had first requested a concession for a casino back in 2011 from the Lotteries and Gaming Authority. “The discussions were fruitless because the government at the time was not interested in issuing another concession for a casino.”

Their forecasts are realistic and not exaggerated, Decesare explained. “When the expression of interest was announced last year, we considered the criteria centering around the issuance of this valuable licence. We clearly understood that the government was looking for added value for the concession, and not just any other casino.

“We decided that if we were going to go for this concession, we would couple it with a much larger investment in our existing hospitality business. We devised a master plan which is being effected today. We purchased the building next door to the Intercontinental Hotel to redevelop it into a Holiday Inn branded hotel, and planned a 32 super luxury suite extension with a new club lounge and pool at the InterContinental, plus a new conference centre.

“These facilities would centre around a luxurious casino itself that will no doubt add massive value to Malta’s casino proposal. All together the project value will surpass €31 million.”

Decesare insisted that Eden’s offer satisfied the 13 criteria listed in the government’s request for proposals, to see a large investment that generates jobs, new businesses and tax revenue.

But Dragonara Gaming Ltd argue that the technical committee conclusions favoured them, due to the superior cash payment they were offering, amongst other reasons.

Sources close to the government have denied this, stating that the technical committee was clear in its conclusions and that it chose Eden Leisure.

There were three other bidders for the licence: Seabank Hotel, Corinthia Group, and Polidano Group of Companies, but they were not shortlisted.

Arthur Gauci, Seabank CEO, told MaltaToday that their proposed casino would be situated in Mellieha, an area which while already having

7,500 beds with 10 hotels, primarily in the 4-star segment, was very limited in terms of tourist entertainment opportunities.

“Mellieha offers upmarket residential property, which could very much be targeted for high net worth individuals moving to Malta. Most of the foreigners residing in Malta choose the Sliema/St Julian’s area due to the entertainment opportunities available in these areas,” Gauci said.

“Opening of a casino at the Seabank would be a natural progression in the development of the hotel and its environs from an entertainment standpoint. The combination of all-inclusive hospitality and casino entertainment is a model that has worked well for major cruise liners and we are confident that we can implement it successfully at the Seabank.”

Alfred Fabri, company secretary for the Corinthia Group of Companies, operator and owner of several hotels on the island, said they were aware that they were not shortlisted but they had no plans to take the matter forward.

Polidano Group of Companies could not be contacted for a comment.