Cyprus Mail
Opinion

Our View: Sole casino bidder in strong position to bring down price

A STEP forward was taken, on Wednesday, in the long process of establishing a casino, when the commerce ministry announced the successful bidder. The ministry’s technocrats, in the end did not have very much work to do in reaching a decision as there was only one bidder. The two other shortlisted bidders – a Cambodia firm and one from the Philippines – withdrew last month leaving the Melco-Hard Rock Resorts Cyprus consortium a free run in the final straight.

Reports suggested that the bidders that had withdrawn had failed to find suitable and affordable land, which is perfectly plausible, given how land prices would have been upped as soon as an owner realised that the buyer would be a casino company. And if the land required was in a coastal area prices would have been prohibitive. Perhaps this was inevitable given the government’s plans for a big resort with many other attractions; the government is talking about an investment that would reach half a billion euro.

The danger now is that the single bidder would be able to lower the price for the licence. There was no such chance, assured the commerce minister yesterday, as it was stipulated in the tenders specs the final proposal could not deviate by more than five per cent from the original bid. And what if the successful bidder insists on a 10 or 20 per cent reduction on the original proposals? Would the government be prepared to scrap the procedure and start from scratch delaying the start of the project, currently scheduled for the first half of 2017, for another two years?

The more likely scenario is that technocrats would engage in negotiations with the successful bidder over the price, as had happened in the case of the airports, with the successful bidder eventually negotiating a lower price. This cannot be ruled out, considering that the winning consortium is in a much stronger position to get its way, especially as the government will want work to commence as soon as possible because of the boost it would give the economy.

Perhaps having one bidder left was inevitable, given the very expensive casino model the government had opted for.

The idea was to make the casino the centre of a big resort with theme parks etc so that customers could bring their families along and keep them entertained while they were gambling. Apparently, this will be the only casino resort in Europe, a similar enterprise in Spain having proved unsuccessful. We can only hope Cyprus’ casino resort will fare well despite the competition it will face from the casinos in the prospective constituent state in the north.

 


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