Genting (GIGNY), a resorts and gaming company, reported a 16% fall in revenue from premium customers at its Singapore location.

The site competes directly with Las Vegas Sands' (LVS) Singapore resort, Marina Bay Sands, which has become the world's most profitable gaming resort in just two years. Needless to say, Marina Bay has done wonders for Las Vegas Sands' bottom line.

Genting wants to expand its casino business into New York, but suffered a blow when talks with Gov. Andrew Cuomo collapsed regarding a casino and convention center at the Aqueduct racetrack. Genting had spent more than $774,000 on New York lobbying in the first 10 months of 2011, the Associated Press reported.

This followed a report saying that Genting and a larger lobby, the New York Gaming Association, poured $2.4 million into a group focused on praising Cuomo and his proposals in television and radio commercials.

Genting also stumbled in Miami, where its planned $3.8 billion resort has not materialized either. The company has also suffered as palm oil prices pulled back after a big rally in 2011 while power generation revenue from Chinese operations fell. The end result was a drop in total revenue by 9.6% to 4.4 billion ringgit ($1.4 billion). Genting Malaysia, operators of the only casino in Malaysia, saw first-quarter profit slip 35% from a year earlier to 270.7 million ringgit ($86 million). The second-quarter devaluation of the Ringgit will not help, either.

Genting is heavily represented by both the iShares MSCI Singapore ETF (EWS) and the iShares MSCI Malaysia ETF (EWM). These ETFs track the MSCI index for their respective countries, both of which have struggled in the past few months over worries in Europe that began with the Greek default in early March. 

Genting's expansion into the U.K. and the U.S. has goosed the top line, but not the bottom. The contribution to income in the U.S. has been frankly awful. Gaming revenue is down significantly in Las Vegas, which is why resort operators are looking to Asia for salvation.

 

Despite the bad news, Genting is working on deploying some of its $5.5 billion in cash to strengthen its foothold in Asia-Pacific region. Genting has no stake outside of Malaysia and Singapore. To rectify this, Genting has been purchasing stakes in Echo Entertainment, an Australian casino company, with the intent of ultimately owning 10%, which would put the Malaysian casino group close to Crown Entertainment as Echo's largest shareholder.

Genting sits on more cash than any other gaming operator in the world and is raising additional billions on the debt market, fueling speculation that its stake purchase in Australia's Echo Entertainment is just the beginning of an acquisition spree. Genting Malaysia and Genting Singapore have a combined 9.7% stake in Echo.

Genting Singapore has issued a perpetual bond at 5.125% coupon and is looking to raise another $500 million to fund further potential acquisitions.  While it may be blocked from developing its own projects, Genting is more than willing to use cash and credit to deal itself into the Asian gaming action. The speculation is that these perpetual bonds are setting Genting up to expand into both Japan and South Korea. But this is another risky venture with echoes of New York in that both potential projects are subject to the whims of politicians and the electorate.  

The good news is that Genting can fund these arrangements, as the bonds have a call date of 10 years, and both issuances would leave Genting with a debt-to-equity ratio of 0.57 -- far better than its competitors, such as Las Vegas Sands' 1.12. But, then again, Las Vegas Sands has the premier facility in Singapore and a massive presence in the gambling mecca of Macau.

Of the two potential expansion sites, South Korea looks to be the bigger opportunity and with Las Vegas Sands already committed to two projects, and Wynn Resorts (WYNN) licking its wounds over a number of failed ventures, Genting looks poised to strike.