According to a January note from Maybank IB Research, the election of Joe Biden as the 46th president of the United States could benefit Genting Malaysia, which once planned to develop a tribal casino resort in Massachusetts.
According to Inside Asian Gaming, in April 2016 the Malaysian casino giant subscribed to interest-bearing promissory notes issued by the state’s Mashpee Wampanoag Tribe to help finance the planned casino project, called First Light Resort & Casino (FLRC). Genting invested US$426.3 million for an expected annual return of 12 percent to 18 percent; it also was tapped to manage the operation for seven years for an additional 30 percent of earnings before interest and tax.
In 2018, the U.S. Department of Interior (DOI) under former President Donald Trump ruled that the Mashpee Wampanoag could not go forward with the development because it was ineligible for trust lands under the Indian Reorganization Act. Genting had to write off its investment and lost about US$62 million per year in interest payments.
That could change under Biden, who nominated a Native American, Deb Haaland to become secretary of the DOI.
“In our view, the Mashpee Wampanoag [now] have a good chance of having their reservation land continue to be held in trust by the DOI,” said Maybank IB Research analyst Samuel Yin Shao Yang in a note.
“This will allow the Mashpee Wampanoag to resume construction of FLRC. If their reservation land continues to be held in trust by the DOI and they are allowed to resume construction, we gather that Genting Malaysia may write back the promissory notes it impaired in 3Q18.” Yin added that the Mashpee Wampanoag may not have “sufficient cash” to resume construction of the US$1 billion FLRC, “even if they were allowed to.
“Our conversations with Genting Malaysia reveal that they may not subscribe for more Mashpee Wampanoag promissory notes until there is more clarity. Thus, the Mashpee Wampanoag may have to seek other sources of financing,” Yin wrote.
“Nonetheless, we opine that there is a chance that Genting Malaysia’s Mashpee Wampanoag promissory notes may now be written back when there was none before.”
Complicating the issue is charges of financial mismanagement by the tribe’s former chairman, Cedric Cromwell, who was removed from office when the charges were filed.
