Saipan revisits casino gaming
Wednesday, 10 August 2011
A United States’ Pacific island around 1,400 miles from the Philippines is again considering casino gaming to plug a budgetary deficit that makes it dependent on US federal aid.
Voters on Saipan have twice rejected—via local referenda—proposals for casino gaming. The issue is being revisited by lawmakers because they say the need for stimulus to the local economy has grown more pressing.
Some politicians on Saipan—the largest island of the Commonwealth of the Northern Mariana Islands (CNMI) where 90% of the territory’s population of 87,000 people live—believe casinos would boost tourism and tax revenues. CNMI’s two smaller populated islands, Tinian and Rota, have previously said ‘yes’ to casinos in a voter referendum. But they are considered too lacking in infrastructure to make them commercially viable for international-standard gaming.
Saipan’s lawmakers expect East Asian visitors would make up the bulk of any casino customers. South Korea’s Asiana Airlines currently operates direct flights between Seoul Incheon and Saipan. And Japanese tourists have in the past made up a significant portion of visitors. From 1919 until a US invasion in 1944, Saipan was a Japanese territory.
More recently the island has had commercial links with mainland China. A number of Chinese companies have previously operated manufacturing businesses and other investments on Saipan. CNMI is a free trade area within the US, but has less stringent labour laws than the continental US. However under a bill signed by President George W. Bush in 2007, minimum wages in CNMI must meet continental US levels by 2015. This has led to a shrinking of the manufacturing sector. Tourist arrivals and tourist revenues have also been falling since 2005.
Macau-based Asian gaming consultant Ben Lee this week gave a presentation on the prospects for a Saipan casino industry at the invitation of CNMI’s Governor Benigno R. Fitial. Mr Lee, managing partner of IGamiX Management & Consulting Ltd, says casino gaming would work, but the community must be realistic about what can be achieved.
“Gaming in the region is now viewed as a game changer. So a lot of places other than Saipan are looking at gaming to actually attract tourism,” Mr Lee said in an interview with the Saipan Tribune after a private meeting with the governor and lawmakers.
“You just have to look at Singapore, [and] Macau as prime examples. Singapore has increased tourism by 20%. In Macau, it's unimaginable. Macau is now five times bigger than Las Vegas [in gaming revenue]. In other countries—Cambodia, Vietnam—everybody's looking at gaming to drive tourism and if you don't have it you lose out in the race,” said Mr Lee.
But he added the island should not expect to draw major gaming investors such as Steve Wynn because of the current capacity limitations of Saipan’s airport and air links. Some lawmakers believe casino operators should pay a US$25 million premium for a Saipan gaming licence. Mr Lee said this was unrealistic. He also advised against exclusive licensing of one operator
“He said even US$20 million is too much,” said lawmaker and house floor leader George Camacho.
“The CNMI is not a proven market yet. We're not going to get high-rollers at first.” Mr Camacho added that even investors in established gaming markets want to get their return on investment within three years.