Updated | Generous concession will save Dragonara casino millions

Gaming industry operators are fuming at ‘unfair’ 64-year extension of Dragonara Casino lease presented in Parliament by Chris Cardona without a call for tenders having been issued

The Dragonara Casino is operated by Dragonara Gaming which has a 10-year lease agreement from government that expires next year
The Dragonara Casino is operated by Dragonara Gaming which has a 10-year lease agreement from government that expires next year

Updated at 3.25pm with PN reaction

The 64-year extension of the Dragonoara Casino concession will save millions for its operators, leaving competitors fuming at the ‘unfairness’ of the situation, BusinessToday can reveal.

The new lease extension agreement was approved by Parliament on Tuesday, when the motion presented by Economy Minister Chris Cardona, and seconded by Deputy Prime Minister Chris Fearne, was uncontested by the Opposition.

The extension was granted without a call for tenders having been issued.

Dragonara Gaming currently pays €1.2 million in rent annually under a 10-year lease agreement awarded by tender in 2010, according to the company’s financial accounts.

But under the renewed lease piloted by Cardona, the casino will only be paying €500,000 for the first 15 years of its 64-year term.

Moreover, for the remaining 50 years Dragonara will only pay €1 million a year subject to an increase of 5% every five years thereafter, with the first increase being applicable on the 21st year.

Savings of €13.5 million are the bare minimum which Dragonara will be enjoying based upon its current annual rent of €1.2 million.

However, as had happened in 2015, when the rent was increased by 15% for a five-year period, further similar increases would have likely been included under any 10 or 20-year lease extensions awarded by tender.

The amounts paid under Dragonara’s current lease agreement are specified under point 11 of Dragonara Gaming Limited’s annual report and financial statement for the period ended 30 June 2012.

The new annual and temporary sub-ground rent terms for the extended lease are, on the other hand, clearly specified in section 2.1 of the deed between Casma and Dragonara Gaming Limited, which was tabled by Cardona in Parliament on 26 June 2019.

With the motion approved, the lease between Casma Ltd – the government-owned company with which Dragonara currently have a 10-year lease agreement which expires next year – and Dragonara Gaming has been extended for 64 years.

Industry operators told BusinessToday they were stumped by the news of the ‘unfair’ agreement having been reached without any competitive process.

One operator told this newspaper that, like many others in the industry, he had been expecting a call for tenders to be issued for the lease concession, and that he had been considering the possibility of entering a competitive bid.

In 1999 and 2010 the lease agreement had been renewed after a call for tenders was issued and awarded to Dragonara Gaming.

Moreover, the operator said they were bewildered as to how, when Cardona presented the motion in Parliament asking for approval for the lease extension, the Opposition had kept mum on the matter.

This did not go down well with the other industry players, with one businessman complaining that no information had emerged from Parliament about the terms according to which the lease had been extended.

“We were very surprised, and we still need to understand what it actually means, because so little information has been forthcoming,” he told this newspaper.

“It’s amazing that no questions were raised by the Opposition, which is quite concerning and makes it apparent that nobody is scrutinising such lease concessions. At the very least it should have asked what the terms of the extension were,” they said.

The operator emphasised that on the surface, the extension was “very unfair” and was a “closed-door deal”.

The sources said they would be considering all options after they acquired more information about the extension’s terms.

Motion not brought up for discussion within PN parliamentary group within sufficient time

BusinessToday reached out to Nationalist Party whip Robert Cutajar to ask why PN MPs had voted in favour of the motion on Tuesday, but no reply was forthcoming by the time of going to print.

Other sources said the motion granting the concession of the land to Dragonara Casino had not been brought up for discussion within the Nationalist Party’s parliamentary group ahead of Tuesday’s sitting.

On the night, when the motion was presented in Parliament, most of the opposition MPs had already left the Chamber to attend a House committee sitting.

PN replies

In a reply received on Thursday afternoon, a spokesperson for the PN said the Dragonara motion was on the agenda of the parliamentary group meeting last Monday, contradicting what the sources told this newspaper.

"This motion was effectively on the agenda of the parliamentary group... what is discussed in the parliamentary group is not for public consumption," the spokesperson said without elaborating on the matter.

Casma Ltd may administer site as it deems appropriate – government

On its part, the Economy Ministry has defended the course of action it chose to take, insisting that the site in question consisted of private land which was under Casma Ltd’s administration, under a title of temporary emphyteusis.

A ministry spokesperson said the site was “at no point” owned or managed by the central government, the Lands Authority, or its predecessor the Lands Department.

“As such, Casma Ltd 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.

Cardona, it added, had presented the motion in Parliament because he had deemed it appropriate “for the sake of transparency.”

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