The Stage

Malay gaming giant enters UK showbiz casino sector

Published Tuesday 3 May 2005 at 12:50 by Alistair Smith

Malaysian gaming giant Genting Berhad, creator and associate of the world’s third largest cruise operator Star Cruises, has increased its stake in casino firm London Clubs International to 29.9%, ensuring it will play a major role in the UK’s new gambling and live entertainment market.

Already LCI’s biggest shareholder, Genting has now increased its stake in the company to just below the 30% point at which it would be obliged to bid for the entire group. The deal comes soon after the Malaysian firm’s decision to increase its holdings in Britain’s biggest casino operator, Stanley Leisure, to 20.3%.

Leisure industry analysts have speculated that Genting is planning a bid to take over LCI, with the intention of merging it with the casino operations of Stanley Leisure. This would serve to strengthen its foothold in the UK gaming industry before the implementation of the Gambling Act. If the merger was to take place, it could see the company running almost 50 casinos in the UK, making it by far the country’s largest gaming operator.

The merger of the two UK firms has been attempted before - 18 months ago, Stanley made an approach to buy LCI and its debts, which were then £210 million. The approach was rejected and since that time LCI’s fortunes have improved, with the company’s equity now valued at £290 million and its debts reduced to £150 million.

In 1994 and in addition to its gaming operations, Genting ventured into the cruise industry with the launch of Star Cruises. Operating in America, Europe, Asia and Australia, the cruises featured on-board live entertainment and gaming. Despite Star Cruises demerging from Genting in 1997, the Malaysians retained a 36.3% stake in the company.

The firm has a history of running casinos outside of Asia. In 1985, it secured the development and management contracts from the Australian governments to establish two venues in Australia - the Burswood Resort and Casino in Perth and the Adelaide Casino in South Australia.

In September last year, Genting bought Maxims Casino Club in London, shortly before entering into a joint venture with Stanley Leisure, which owns 41 casinos across the UK. This operation is known as Stanley Genting Casinos Ltd and intends to develop Las Vegas-style sites across Britain.

The Gambling Bill became an Act of Parliament on April 9 and could be implemented from two months after that date. Despite the government’s pre-election deal to limit to one the number of super-casinos in the UK, the Department for Culture, Media and Sport has hinted that more could be built in the future.