Inside Asian Gaming

INSIDE ASIAN GAMING | May 2010 10 H ow many of Marina Bay Sands’expected 80,000 daily visitors will be supplying the financial fuel for the MBS engine room, the casino? There is a Paiza Club for high rollers, just as in The Venetian Macao. At the media event for the opening, we were not shown that facility, which could be for any number of reasons—including LVS not giving priority to VIP play in its business model, unlike in Macau. “As we said several months ago, we intend to run this casino without dependence on the Macau junket style of operations,” said LVS President and Chief Operating Officer Michael Leven at the opening press conference. “We would run this [casino] business [at MBS] quite similarly to the way we run Las Vegas in terms of high quality VIP play independent with [operator] credit, as opposed to the junket situation. From an economic standpoint, assuming our [VIP] process works, it’s more profitable on the margin than the junket play, which requires higher commission rates. We never expected that the Macau-style junket play would be licensed under the Singapore regulations.” Mr Leven is clearly closer to the process and the government decision makers than the gaming industry media, but it is difficult to see how LVS and Genting could be anything other than disappointed, even if not surprised, that high volume (albeit low margin) junket play has effectively been ruled out by the toughness of the financial reporting conditions and probity checks required by the Singapore government. Importance of being local Mr Leven and Mr Adelson both went on record on the opening day stating the importance of Singapore customers to the MBS business model. “Singapore is absolutely the most vital market for us, but it’s clearly not the only market,” stated Mr Adelson at the main press conference. “The surrounding countries of Malaysia, Indonesia, Thailand, Vietnam; parts of China; from Australia, Korea, Japan and Taiwan. These are all in our markets. We have MICE business coming from other parts of the world outside of Asia.” Singapore is home to a lot of rich people. According to the World Wealth Report 2008 produced by Merrill Lynch, an investment bank, and Capgemini, a consultancy, there were 77,000 US dollar millionaires resident in the Lion City in 2007 out of a then total population of 4.59 million. Although it’s reasonable to assume the number of millionaire residents may have fallen since the financial crisis of September 2008, that’s still a good sizeddomestic targetmarket for a casino. But howmany of themwill be willing or able to play in the IR casinos is open to question. There are some other regulatory issues aside from the tough junket rules that could put a crimp even in the direct credit VIP play model. Section 108(7)(a) of Casino Control Act states:“……a casinooperator or a licensed junket promoter may provide chips on credit to a person: (a) who is not a citizen or permanent resident of Singapore (as defined in section 116(9) or (b) who is a premium player.” A premium player is described under Part I (3)1 of the Casino Control Act (Credit) Regulations 2010 as someone of whom: “….the total amount of money, chips or any cheque or traveller’s cheque credited to the patron’s deposit account in accordance with paragraph (2) is not less than $100,000 [Singapore].” In other words, Singapore citizens and permanent residents can play as high rollers and attract the lower tax rate on The Engine Room An in-depth look at Marina Bay Sands’ gaming offer Singapore’s tough rules on junkets mean MBS will need to use Las Vegas style direct credit for high roller play Marina Bay Sands