RWLV said last week it would pay the fine as part of its final settlement with NGCB regarding a complaint the board had filed with the Nevada Gaming Commission last August.
However, the settlement agreement is subject to acceptance by the commission at a hearing scheduled for this Thursday. If approved, it would be the second-largest fine imposed in Nevada’s gaming history.
In light of the development, research analysts are positive that RWLV will retain its non-restricted gaming licence after paying the fine.
In a note today, Maybank Investment Bank (Maybank IB) said RWLV has opted to settle the matter rather than proceed to a hearing, citing costs and uncertainty as key considerations.
“The fine accounts for less than 5% of Genting’s FY2025 earnings (estimated for the financial year ending Dec 31, 2025). More importantly, we believe the settlement will encourage gamblers to return to RWLV,” it said.
In its complaint filed in August 2024, NGCB accused RWLV of failing to ban individuals linked to illegal bookmaking from its casino in Las Vegas.
It said surveillance of RWLV’s hotel found individuals with ties to illegal bookmaking and illegal gambling allowed to bet at the casino, creating the perception the hotel was a place to “launder illicit cash”.
Maybank IB believes RWLV will recover financially from the setback. It noted the company’s Q4 FY2024 earnings before interest, taxes, depreciation, and amortisation (Ebitda) had plunged to approximately US$1.5 million (RM6.7 million) below its FY2023 quarterly average of US$48.8 million (RM216.3 million).
“We believe that some gamblers avoided it while it was being investigated by the NGCB. Our experience tells us that gamblers, whether guilty of wrongdoing or not, tend to avoid casinos under investigation for fear of being investigated themselves,” it added.
While the US$10.5 million fine will hit RWLV’s bottom line, it could have been very much worse.
CIMB Securities said while the fine is set to be the second-largest ever by the Nevada state gaming regulator, it remains within the lower end of expectations, ranging from US$7.5 million to US$75 million (RM33.3 million to RM332.7 million).
According to terms of the settlement, RWLV did not admit or deny NGCB’s allegations but agreed to greater scrutiny of its anti-money laundering (AML) programme and practices.
It will also submit an independent audit of its AML compliance to the board two years after the settlement is approved.
The company has also overhauled its leadership team and board of directors, appointing industry veteran Jim Murren as chairman and independent board member. Other newly appointed board members include former NGCB chairman AG Burnett and former Malaysian investment banker Kong Han Tan.
Both Maybank IB and CIMB are maintaining their “buy” calls on Genting. Maybank IB has lowered its target price on the stock to RM3.98, a 67% discount to its valuation while CIMB has a TP of RM5.25.
Genting closed 1.5% or five sen lower at RM3.27 today, valuing the group at RM12.68 billion. It has fallen 15.1% year-to-date and 31.9% over the past one year.