Update 2 | Dragonara casino operator gets 64-year concession extension with no competitive tender

Updated at 6.10pm with Economy Minister's replies

Gaming industry players are up in arms after the Dragonara casino operators received a 64-year extension to their lease agreement without a competitive tender.

Dragonara Gaming, a company that is ultimately co-owned by Johann Schembri and the Bianchi family, has a 10-year lease agreement with government-owned Casma Ltd that expires next year.

The property covered by the lease includes the Dragonara casino in St Julians and the land immediately surrounding the building.

According to a motion tabled in Parliament by Economy Minister Chris Cardona, Dragonara Gaming has asked Casma Ltd for a 64-year lease extension until 2083.

The motion seeks parliament’s approval so the new lease agreement between Casma and Dragonara Gaming can go ahead.

However, industry sources who spoke to MaltaToday said an extension like this should have been issued by competitive tender like had happened 10 years ago.

Casma Ltd had awarded Dragonara Ltd a 10-year lease agreement in June 2010 after a competitive tender. Dragonara was obliged to invest €17 million in the property, something the parliamentary motion says was more than fulfilled.

“We cannot understand why Dragonara is being given preferential treatment over such a lucrative long-term lease without a competitive tender being issued,” industry sources said.

Others questioned whether an agreement like this would be in breach of EU state aid rules.

“An extension like this to a lease agreement that expires next year should be awarded after other players are given the chance to compete for it,” the sources said, adding government could get a better deal.

It is unclear whether Cardona sought Cabinet approval for the motion and the new lease agreement drafted between Casma and Dragonara Gaming.

It is also unclear whether Dragonara will be paying a premium for the lease extension.

The motion was eventually approved unanimously by Parliament on Tuesday afternoon with no discussion on the terms and conditions of the concession. It was seconded by Deputy Prime Minister Chris Fearne.

Economy Ministry replies

In response to questions from MaltaToday, the Economy Ministry defended the course of action, insisting the site in question consisted of private land that was under the administration of Casma Limited under title of temporary emphyteusis. Casma had acquired the title from the Malta Development Corporation in 1990.

"At no point was the site owned or managed by the central government, the Lands Authority or its predecessor the Lands Department. As such Casma Limited may administer the site and dispose of same as it may deem most appropriate and in the best interest of the Maltese economy," the ministry said, responding to questions on whether a valuation was sought from the Lands Authority for the land.

The ministry added that notwithstanding this situation, Cardona "felt it was appropriate for the sake of transparency" to present a motion in Parliament.

"In terms of the lease agreement dating back to 2010, Dragonara Gaming Limited was obliged to carry out substantial investment over the site which investment Casma Limited ensured Dragonara Gaming Limited has carried out. Dragonara Gaming is now undertaking to continue making additional investment over the site which shall include restoration and conservation works which shall amount to millions of euro," the ministry added.

It noted that one of the conditions Dragonara was committed to was the retention of Casma employees under a secondment agreement.