Inside Asian Gaming

INSIDE ASIAN GAMING | December 2010 20 Policy Outlook control over the process. There are a number of political and commercial factors that could potentially swing the government’s position either way. Potential benefits include the fact the nation’s leaders would prefer rich people, and ideally foreign rich people, to be the ones losing the money at its casino tables, not its own low-income and middle classes, or even its neighbours’ less well off citizens. There has been some negative publicity recently about the casinos targeting lower- income local players rather than wealthy foreign tourists. Sheldon Adelson, the Chairman and Chief Executive of Las Vegas Sands Corp, the developer and operator of Marina Bay Sands (MBS), said during his company’s third quarter earnings conference call that around 60% of his gaming “income” (his phrase) at MBS was coming from VIP play. VIP rolling in 3Q 2010 at MBS amounted to nearly US$10.3 billion. By definition, given that junkets are not currently authorised in Singapore, all of MBS’s VIP action in the third quarter must have come from direct premium players issued with credit directly by the casino. While Mr Adelson is known to be keen to leave out the middlemen agents wherever possible, in the same earnings call he also alluded to one of the factors that could currently limit the growth of the Singapore VIP segment—credit default risk. “We are building up steady stream of business from Korea, from Japan. And outside of that area Hong Kong is our biggest contributor. China is, let me say, equally as strong. So we get a lot of business from China, but we are very cautious about granting credit only to people that we know.” The granting of junket licences in Singapore would remove some of the credit risk from the operators’ shoulders and likely deliver a higher volume of foreign ‘whales’. The phrase ‘Asian junket’ is synonymous in operators’minds with the word‘sharing’, in relation to VIP commission. But Singapore’s low tax rates (5% VIP gaming tax plus 7% Goods and Services Tax) will ensure that any Singapore-generated junket play will still be more profitable than its equivalent in Macau, where gaming tax is levied at 35%, with two further contributions of up to 2% and 3% of the gross respectively for social and economic purposes. Allowing VIP junkets to operate legitimately would potentially open the Singapore casino market to even more mainland Chinese high rollers. Those VIPS cannot legally convert their renminbi wealth on the international market unless they have RMB accounts held in Hong Kong or Macau. Such an opening up of the Singapore VIP market could, however, potentially have negative implications for diplomatic relations between China and Singapore. That’s unless China were kept notified about whom among its citizens were signing up as Singapore junket customers and how much they were spending. Legal Singapore junkets could also make life easier for gamblers from jurisdictions such as Vietnam and Indonesia, where controls on currency exchange and The nation’s leaders would prefer rich people, and ideally foreign rich people, to be the ones losing the money at its casino tables, not its own low-income and middle classes, or even its neighbours’ less well off citizens The casino at Resorts World Sentosa, Singapore