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26/01/14 - A Casino on troubled waters - Miami to the Bahamas

Genting may have placed a losing bet on running a casino ferry between Miami and Bimini.

 

In federal court documents, the Malaysian casino giant warned of “incalculable” losses if the United States continues to ban it from using foreign labor on overnight gambling runs into international waters. Genting described the gambling “cruises to nowhere” as central to covering the costs of ferrying passengers between PortMiami and its new casino resort in Bimini, and it is suing to resume the trips.

 

 

The Bimini SuperFast ship launched in July partly to help Genting establish itself as a player in South Florida’s gambling scene while it wages a political battle to build a massive casino resort in downtown Miami. But in recent months, Genting scaled back its sailing schedule as it dealt with delayed construction of its pier in Bimini, the inability to shuttle passengers to shore in rough seas, and, as of Nov. 28, a ban of its overnight gambling cruises over visa issues.

 

 

This week, a federal judge asked lawyers for Genting and the U.S. Customs and Border Protection agency to clarify their arguments regarding the foreign workers on the SuperFast who are serving drinks, taking tickets and performing other functions not directly related to operating the ship. In a suit filed late November in U.S. District Court in Washington, D.C., Genting asked a court to overturn CBP’s ruling against using foreign workers in the SuperFast overnight cruises.

 

 

Genting insists the SuperFast uses the same provision in maritime law that allows Miami-based ships to employ thousands of low-wage foreign workers for cruises that stop at ports in other countries. Immigration officials contend the provision exempting ships from U.S. labor laws does not apply for “cruises to nowhere,” because the passengers never set foot on foreign soil. In court papers, government lawyers noted Genting could solve its problem by hiring U.S. workers for the ferry, even if that cut into profits for one of the world’s largest casino conglomerates.

 

 

“Plaintiffs have come to the Court asking it save them from a series of bad business decisions,” the agency said in a motion filed Monday.

 

 

The agency’s response: “Plaintiffs still possess multiple courses of action that would help them avoid any potential harm to their parent company's $39 billion market capitalization.”

 

 

Government lawyers ordered Genting to hire U.S. workers for its gambling cruises or to stop offering them, which it did on Nov. 28. In court documents, Genting described the “Evening Excursion” gambling cruises as essential to its business plan, which assumed enough ticket sales to fund a $7 million annual lease for a terminal at PortMiami.

 

 

While both the day and night cruises offer gambling, Genting can only sell the two-hour day trips to Bimini to customers holding passports. For the nighttime “cruises to nowhere,’’ Genting had access to the entire South Florida gambling market, and touted its onboard sports-betting parlor as the only one of its kind in the region.

 

 

In a Dec. 13 affidavit, the Genting executive in charge of the ferry suggested loss of the night cruise revenue may imperil the entire venture.

 

 

“Without the Evening Excursion, Resorts World Bimini simply cannot generate the revenues needed to continue the Day Excursions, meet our financial commitments, and otherwise continue the foregoing contributions to the local economy in Miami,” wrote Gregory Karan, senior vice president of Bimini SuperFast Operations. “Prospectively, Resorts World Bimini cannot schedule future voyages of the Evening Excursion, which eliminates half of its cruise operations. The potential losses are incalculable.”

 

 

By using foreign workers, Genting and other cruise companies can avoid federal workplace laws that require U.S. minimum wages, payroll taxes and compliance with other labor laws. Genting said it employs about 250 crew members for the SuperFast, and that replacing them with a U.S. crew would be “cost-prohibitive,” partly because of the contractual severance costs for the current workers.

 

 

Bob Peltz, a Miami attorney specializing in maritime law, said that based on the legal filings, Resorts World Bimini seems to be “trying to take advantage of a business model that would save them a lot of money.”

 

 

Executives with Genting declined interview requests Thursday. In a statement, Genting Americas senior vice president Christian Goode said in part: “As is common in the cruise industry, the Bimini SuperFast utilizes an international crew holding the required D-1 crewman visas for its day and night cruises. This is based on decades-long precedent that has been established across the U.S. cruise industry.”

 

 

Genting is in the process of demolishing the old Miami Herald headquarters, which it purchased for $236 million in 2011 as a planned casino site. Its push for a change in Florida’s gambling laws stalled in Tallahassee, and now executives say they’re proceeding with a resort and residential complex on the waterfront property even if they can’t get approval for a gambling facility.

 

 

In 2012, Genting found a way to offer South Florida residents a place to gamble when it announced a new casino at the Bimini Bay Resort on the small Bahamian island 50 miles off the coast. Genting eventually renamed the entire property Resorts World Bimini, purchased a 1,500-passenger cruise ferry to take people there, and signed a 10-year deal for a terminal at PortMiami, guaranteeing Miami-Dade County $7 million in rent per year.

 

 

But problems have persisted with the SuperFast. Efforts to build a pier in Bimini to house the ship were held up by environmentalists, who tried to block the project in court. Genting said construction has begun, and that it should be operational by the summer.

 

 

Without a pier, Genting has been forced to use a smaller boat to get passengers from the SuperFast to land, a complicated maneuver that it can’t accomplish in rough seasons. Genting regularly cancels sailings, including this Friday’s planned voyage to Bimini. In recent weeks, Genting decided to keep the boat docked most of the week, announcing a “winter” schedule that offers trips Friday, Saturday and Sunday.

 

 

In court filings in the Bahamas over the pier dispute, Genting stated it expects to lose $11 million on its Bimini SuperFast endeavor in 2014, according to The Tribune, a newspaper in Nassau.

 

 

Despite the challenges, a Genting spokesman on Thursday said the SuperFast will hold its course.

“No impact on current operations,” the spokesman wrote in an email. “The ship’s daytime sailings will continue as scheduled.”


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