Jamaica has finally opened up the application process that will eventually lead to the granting of casino licences, but investors first have to prove that they have the capacity to deliver up to 2,000 rooms in an integrated development plan.
In return, the Jamaican Government offers the promise of “exclusivity” to winning bidders, which is essentially a buffer zone within which no competing casino can be developed.
And it is willing to facilitate deals with the state-owned Urban Development Corporation (UDC) for potential but landless casino investors to gain access to property to house their developments.
The Ministry of Finance on Tuesday announced requests for proposals for Integrated Resort Developments (IRDs), which will include casino gaming facilities for guests in the resorts. The deadline for submission of the proposal, and the accompanying US$150,000 (J$15m) application fee, is September 30.
“There is significant due diligence to be done, and those have costs,” said a gambling official, speaking on condition of anonymity, regarding the size of the application fee.
ministry approval
The ‘Approved IRD’ (AIRD), which will be issued as a development order, first has to be approved by the Ministry of Finance, after which the investor can then request a casino licence under the law enacted in 2010.
“Under The_Casino_Gaming_Act_2010, applications for AIRDs are to be made to the minister. After an AIRD is made, the successful applicant will apply to the Casino Gaming Commission, which may grant a casino gaming licence pursuant to Section 18 of the CGA,” said head of the commission, Walter Scott.
Jamaica will issue a restricted number of licences. The law specifies three.
Among those expected to bid are The Palladium resort group, and state-owned Harmonisation Limited and its partner in the Harmony Cove resort to be developed in Trelawny. Rose Hall Developments Limited continues to be cited as potential contender, but Michele Rollins was said to be off the island when her office was asked for comment.
Palladium’s country manager Dimitris Kosvogiannis was not reached Tuesday, as he was in Spain. The resort previously announced a US$300m plan to add another 805 rooms to an existing 1,056 at Point, Hanover, to position for a casino licence. However, its position is undergoing a review, Wednesday Business has learned.
The first phase of Harmony Cove is projected to cost US$800 million and will take three years to complete, according to a filing with the US Securities and Exchange Commission by Finance Minister Dr Peter Phillips.
The finance ministry has put together a technical team comprising an architect, civil engineer, structural engineer, sociologists, legal adviser, financial analyst, environmentalist, landscape architect, land surveyor, geologist and archaeologist to review the proposals.
The IRD proposals must consist of various tourism amenities and facilities, including, but not limited to, hotels, hotel rooms, villas, casinos, attractions, sporting facilities, entertainment facilities, service centres and shopping centres.
The review period for applications is an estimated four months, which means that approved developments are likely to be announced in January 2014.
The approved IRD may include geographical exclusivity, which means that the granting of an IRD in one area may mean that others with a certain range of miles may not be able to pursue a similar development.
“The applicant has to establish the case for exclusivity, if it can,” said Scott.
Regulations posted on the ministry’s website note that if, after negotiations between the prospective promoter and the finance minister, the development order has an exclusivity feature, “the casino operation would be the only casino operation within a specified geographic area of Jamaica for an agreed period of not less than 12 years, subject, possibly, to casino gaming conducted for bona fide visiting cruise-ship passengers on certain cruise ships during overnight stays in cruise ports.”
IRD applicants must demonstrate ownership of the proposed development site, or provide supporting legally binding documentation to demonstrate the right to control and develop the property.
site facilitation
Indeed, Jamaica is willing to facilitate access to property. In the event the developer is in need of a site for its IRD, the finance ministry said the UDC is prepared to negotiate conditions for possible use of properties it owns in Roaring River, St Ann; Success Estate, which is adjacent to Rose Hall in St James; and Manatee Bay, Hellshire, St Catherine.
The proposed hotel development must cover a minimum of 2,000 rooms, of which no fewer than 1,000 should be ready for occupancy prior to the start of casino-gaming activities.
The applicant must also demonstrate feasibility of the project, provide a business plan covering at least five years, and submit a detailed operating and financing plan, “distinguishing between debt and equity, including relevant documentation to demonstrate funding commitment and timing”.
Jamaica expects to earn revenue from the IRDs via a 10 per cent tax on gross profits accruing to a casino operator monthly.
Gross profit is defined as the difference between the aggregate amount staked or wagered by casino patrons and the total amount paid out as winnings, the finance ministry said.
Otherwise, the Casino Gaming Commission would earn income from annual licence fees, annual fees per licensed gaming machine; annual fees payable by the holders of personal licences required for the holding of certain key positions in the casino organisation; and application fees for licences.
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