‘Double’ casino concession raises questions over tender process

The Opposition and the government are about to lock horns over a controversial decision to award two casino licenses to operators who ranked first and second in the sole tender for a new concession issued recently.

The Nationalist Party yesterday expressed concern following a court’s decision to stop the government from granting two new casino licenses to the Eden Leisure Group and Dragonara Gaming Limited.

The Labour government issued a concession for two casinos, one in Malta and the other in Gozo, back in 2013. Four companies collected documents following the government’s call for expressions of interest in the running of a casino in Gozo, while six companies collected documents related to a separate licence for the running of another casino in Malta.

But last week, the government announced it was awarding two licences for the Malta casino, selecting Eden Leisure Group and Dragonara Gaming as the first and second ranked concessionaires, respectively.

In their counter-protest filed yesterday, Eden Leisure Group said the injunction was causing the company damages, and insisted that there was noting strange or incorrect about them having been selected as the preferred bidder for a casino licence.

“The selection process was a judicious one and according to the law… it is evident that our offer was the more advantageous one to the government.”

Eden Leisure said that the PU had considered all the economic factors in its offer, including those for the generation of trade, investment and jobs.

Eden Leisure said that Dragonara Gaming’s contention that its offer was more advantageous was gratuitous. “It is simplistic to allege that [Dragonara’s] offer was three times the financial amount offered when one fails to evaluate the financial implications of such a complex proposal.”

Eden Leisure added that Dragonara’s allegations were vexatious because the company was unaware of its financial offer, which details remain part of the confidential tendering process.

Preferred bidder

The government’s Privatisation Unit identified Eden Leisure Group Limited as the preferred bidder for a casino license following a competitive process that started with a call for proposals on 31 July 2013.

Dragonara Gaming, which already owns the concession on the Dragonara Casino, placed second.

However, the government decided to negotiate with both companies with the aim of issuing a concession to both of them.

Dragonara Gaming Ltd took the issue to court, objecting that Eden was also going to be awarded a casino license, arguing that their own financial offer was €3 million higher than Eden’s. The court, presided over by Justice Joseph Micallef, ordered an injunction over the granting of the casino licenses until the issue is settled in court.  

On its part, the PN said it wanted a clear explanation from the government, “particularly when one considers that the tendering process had been going on for a year and a half… Everyone knows that the company that had the best offer didn’t get chosen. We expect Chris Cardona to explain what happened and what didn’t happen in the process.”  

But sources close to government told MaltaToday yesterday that the application by Dragonara Gaming for the injunction against the Finance and Economy ministries in connection with the issue of a casino licence was an attempt to derail the whole process.

“If they were serious about a licence they would not have commenced legal proceedings – the interpretation is simple, they are trying to stall the whole process to protect their own operation,” the sources said.

A case has now been appointed for hearing on November 17.

Under the Nationalist administration, Malta’s casino licences were limited to five: the Dragonara Casino, today operated by Dragonara Gaming Ltd; the Caisno di Venezia, which closed its doors last year; a licence for Midi plc for a casino at Manoel Island, which has yet to be opened; and a licence to the Tumas Group for its Oracle Casino, which was then allowed to reduce its gaming tables to open another casino at Portomaso under a ‘split licence’.

The fifth licence was originally earmarked for a casino inside a hotel. Labour said it would issue another licence for a Gozo casino.

‘Inconclusive’ technical evaluation

Sources close to the bidders told MaltaToday that the outcome of a technical committee presided by former Judge Geoffrey Valenzia decided in favour of Dragonara Gaming Ltd because of its favourable business proposal.

But the sources close to the government denied this, saying the conclusions by the technical committee were inconclusive.

The government’s decision to issue a casino licence to Eden Leisure Group Ltd coincided with the announcement by the group that it would invest over €30 million to extend its operations in St George’s Bay.

The original expression of interest issued by the government was for one casino licence in Gozo and one in Malta. The Gozo concession was not decided upon.

Of the five applications submitted the bid, the Dragonara Gaming bid offered an up-front concession fee of €4.3 million; Eden which offered a smaller fee of €1.25 million, and three other contenders, Polidano Group, the Corinthia Group and the Seabank Group.

All these three companies had made offers of around €1 million each.

It appears that in their application the Eden Leisure Group offered a business plan that indicated a greater contribution in terms of gaming tax from revenues. But their business plan projection was described as highly “unrealistic” by sources close to Dragonara.