In August, Asian investor Imperial Pacific International was awarded a 25-year license for the construction and operation of a casino on Saipan, the largest of the Northern Mariana Islands. According to the contract, the period could be extended by 15 years. Recently, gaming experts shared their doubts over the success of this $7.1-billion project.
The Hong Kong-listed company announced that it plans to build the first large-scale hotel and casino resort on the island. It will offer 4,200 rooms for its guests and a total of 1,600 gaming tables. The initial cost of the facility was estimated at $3 billion. Imperial Pacific, however, decided to invest twice as much.
By comparison, the construction of Macau and Singapore-based gambling venues usually costs between $3 billion and $4 billion.
As it was announced, Imperial Pacific will be allowed to open junket rooms for VIP players. However, according to local media, it is not likely that the Hong Kong-listed company will be able to invest the amount of $7.1 billion.
Yet, the casino will most certainly provide revenue for the Saipan government. Imperial Pacific promised that it will annually pay the amount of $15 million with the option for the fee to be increased. In addition to this, the company also stated that it will create the so-called community chest. Initially, it will contribute the amount of $10 million to it and the money will be distributed to residents of the island.
What is more, Imperial Pacific said it will pay US$20 million once the construction of the first hotel begins. After the venue’s first full year of operation, the company will pay annually the sum of $20 million.
The Hong Kong-based company stated that it will finance its expensive project by means of equity and/or debt financing. It seems, however, that it has not figured out how it will raise the money needed. Yet, it announced that the building process is planned to start in the beginning of 2015 and the first hotel is expected to open doors in 2016. The whole resort is to be completed by 2018.
Gaming experts, however, are questioning the success of the project, considering the fact that the island is a five-hour flight from mainland China.
According to an equity analyst, the venue is not particularly likely to generate substantial revenue due to its location. Yet, some Chinese VIP players travel even to Australia which is even further away. So, the multi-billion project might surprise experts. It all depends on whether junket operators will agree to “divert players from other markets.”
A gaming investigator shared that Imperial Pacific has approached some of Macau’s most popular junket operators but none of these have given an affirmative answer.
Mark Brown, chief executive of the Hong Kong-based company, refused to comment on the matter. He was assigned to his position on November 10. Brown joined Nagacorp in December 2013 and left the company only eleven months later. The popular Cambodian casino operator stated that it was not particularly happy with this turn of events.
