Harrah’s Pulls out of Singapore Casino Bid

The company had pulled out of the race to build an integrated casino resort in Singapore.

According to sources at Harrah’s, the company has been working during the last three months to perfect their proposal for a project on Singapore’s Sentosa Island saying the company, along with its partner Keppel Land (SGX: KPLD), has “worked tirelessly on a proposal for a spectacular integrated resort at Sentosa Island that would meet the Government of Singapore’s ambitious goals for the site. We brought together a broad range of talent to design a unique, world-class project that would fulfill Singapore's aspirations. Regrettably, we determined it would not be possible to deliver a development on the scale we envisioned for Sentosa Island while meeting our objectives for this project.”

Keppel Land Limited is one of the largest listed property companies by total assets on the Singapore Exchange Securities Trading Limited and the property arm of the Keppel Group, one of Singapore's largest multinational groups with core businesses in offshore and marine, infrastructure, and property.

Harrah’s, which had put up a $100,000 fee to bid on the project, has said it remains committed to developing projects in Asia. However, this is the second major stumble for the company in Asia. Besides letting this project slip through its grasp, Harrah’s has also failed to plant a flag in the Macau market -- a Chinese protectorate where casino gaming is accelerating at a furious pace. In fact, it is being widely reported the region will pull in more revenue than the Las Vegas Strip during the coming year.

Previously Harrah’s had lost out in the bidding battle for Singapore’s first casino to rival Las Vegas Sands Corp., who was awarded the right to build a property in the Marina Bay District and will be constructed for about $3.6 billion. Called the Marina Bay Sands it is being developed by many of the same people who created The Venetian in Las Vegas.

The Marina Bay Sands will include a 2,500 room hotel, 1.2 million square feet of flexible meetings, incentive, convention and exhibition (MICE) space, one million square feet of retail space, three large entertainment venues and a casino. The casino will sit on a 50.9-acre waterfront site with a skyline view of city’s downtown. The resort is scheduled to open in 2009 and LVS will have the opportunity to run the casino for a minimum of 30 years.

The Harrah’s Singapore bid originally had a 1 million square foot theme park as part of the package which could have been operated by a company such as Universal Studios and would have featured movie-themed attractions created by such luminaries as film director James Cameron who is know for the first two Terminator films as well as Aliens and the $1.8 billion grossing Titanic.

According to Bear Stearns gaming analyst Joe Greff, as reported by the Las Vegas Review-Journal, Harrah’s may have pulled out because it is considering going private in a $15 billion deal with Apollo Management and Texas Pacific Group. He believes the additional scrutiny by the Singapore government may not be in the deal’s best interest.

"If Harrah's did win the license and was acquired, the new owners would have to go through probity checks by Singapore authorities," Greff said in a note to investors.

This year Harrah’s has signed deals to build casinos in Spain and Slovenia. It is also getting into the UK market in a big way with its purchase of London Clubs International for $530 million.

Only three bidding entities remain including Kerzner International Ltd. along with its Singapore partner CapitaLand; and Eighth Wonder, Starwood Hotels & Resorts (NYSE: HOT) and Isle of Capri Casinos Inc. (NYSE: ISLE).

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Each of the companies must enter their complete bids by October 10. The area in which the new integrated resort will be built is on Sentosa, a 49-hectare site on which the government and the Singapore Tourism Board would like to see a multi-faceted project mixing casino gaming with family-focused activities in order to boost tourism among many demographics.

Merrill Lynch estimates this project will see about $2 billion in investment. Singapore is looking to double its tourist arrivals to 17 million by 2015.

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