Source : Business Times – 7 Nov 2009
Faced with competition from regional countries also eyeing the benefits of the casino gaming industry, the two IRs cannot afford to be complacent
A FEW weeks ago, Singaporeans watched in awe the hoisting of a seven hundred tonne beam linking the towers of Marina Bay Sands (MBS) to form the Skypark – a vast rooftop garden, while at Sentosa, Resorts World Sentosa (RWS) was working on the finishing touches to the rides for its Universal Studios Theme Park.
Just how awesome these two integrated resorts (IRs) are is becoming more visible by the day. Together, they will cost in excess of $13 billion when they are complete. Not only will they be iconic attractions, but within five years they could bring in 17 million top quality tourists who will spend in excess of $30 billion and help create over 100,000 jobs, directly and indirectly.
Some sceptics wonder how Singapore’s IRs will be impacted by Macau. But there is unlikely to be much overlap; moreover, the market is big enough for both.
For the last 65 years, Macau has been basically a gambling colossus and will always be, even with top attractions such as The City of Dreams, Venetian and the MGM Grand. It is amazing that with a mere three licences issued to Stanley Ho’s Sociedade de Jogos de Macau Holdings, Sheldon Adelson’s Venetian and Steve Wynn’s Wynn resorts, Macau’s gambling scene has evolved into 32 casinos. Most visitors cannot tell which are the ones with the original licences and which are sub-licencees or concessions.
Even within new casinos, you will find junket rooms of up to 12 tables operating on a joint venture basis, such as Star Cruise’s Crockford Room and Putra Sampoerna’s Mansion House – both located at the MGM Grand. The Macanese, in conjunction with their Hong Kong associates, have reinvented the game of baccarat, which represents close to 70 per cent of each casino’s wagering.
Singapore’s IRs are setting their sights on total entertainment with great experiences in gaming, gourmet dining, shopping, meetings and exhibition activities, great accommodation and dazzling shows.
Junket operators who bring high-rollers into Macau have introduced ‘parallel betting’, under which the operators use the outcome of bets at the casino table, but accept side bets from their clients that are a multiple of the actual table bet.
This effectively reduces the 39 per cent gaming tax rate which the casino pays, while the bettor will be able to settle either way with the junket operator when they return to the mainland. Junket operators have also introduced insurance such as the blackjack game to baccarat, which ensures the bettor a guaranteed win if he has a high-point card before the house draws the third card.
Junket operators are critical to the survival of the gambling industry in Macau. They enable casino operators to pay less punitive taxes, assist the bulk of mainland Chinese to make settlements back home, thus overcoming currency restrictions and provide credit to players.
Notable junket operators such as Amax and Neptune, both listed Hong Kong entities, are supported by many casinos. They raked in close to $10 billion in gaming revenue in 2008. However, they are also facing strains – many are saddled with uncollectable debts, the Chinese government has been coming down hard on embezzlement and abuse by both Chinese officials and people in the private sector.
The practices that are rampant in Macau will not be found in Singapore’s two IRs. The Singapore authorities have carefully planned the entire operation and have anticipated many of the possible abuses. Most important of all, there will be no sub-licencees, which effectively reduces the policing area.
Singapore’s IRs are setting their sights on total entertainment with great experiences in gaming, gourmet dining, shopping, meetings and exhibition activities, great accommodation and dazzling shows. However, gaming will still be an important revenue source – up to 60 per cent. Singapore authorities must be careful not to derail this. Already, there are concerns about the admission levy for locals, the restrictions on ATMs and exclusion orders. People come into the gaming rooms of the IRs to have a great time. So our regulators must be practical in their enforcement.
Singapore’s superb infrastructure and security has already attracted many high net worth families to make this country their second home. MICE operators are also already taking bookings to hold meetings and exhibitions in Singapore.
London is a good example of how casinos helped attract many Arab families to relocate there when their second homes in Beirut were overrun by the civil war in the 1970s. Of course, casinos were not the only attraction: London, like Singapore, has some of the best private schools, medical facilities and shopping. But for high net worth individuals, its casinos were an important part of its entertainment value. More than 5,000 high net worth families from Beirut and elsewhere in the Middle East moved to London during the late 1970s, causing a mini boom in the markets for housing and top-end services.
Today, many wealthy foreigners are choosing to spend time in Singapore – as evidenced by the notable levels of purchases of property by foreigners in recent years. With the opening of the IRs, it is likely that demand for high-end accommodation will increase further.
While the initial novelty and stunning attractions of Singapore’s IRs could bring in considerable tax revenues as well as tourist dollars, Singapore cannot afford to be complacent. Other governments in the region are also eyeing the benefits of the casino gaming industry. Taiwan will soon approve casinos in Penghu Island. Tokyo is about to announce an IR at Odaiba in Tokyo Bay.
The Philippines is in the midst of building a massive IR in Manila Bay and soon, we may witness the legalising of illegal casinos in Vietnam, Cambodia and Laos. It may not be long before Thailand and Indonesia (Bintan) too approve licences for gaming operations within their jurisdictions. There are already no less than five casino ships trawling international waters around Singapore, drawing large numbers of patrons.
In the face of such competition, it will be a constant challenge for Singapore’s IRs to keep reinventing themselves to draw in high-rollers from around the world and keep their attractions compelling to tourists.
By Ronald Tan, a casino gaming consultant who has been associated with the industry since the 1970s
No comments:
Post a Comment