Inside Asian Gaming

November 2011 | INSIDE ASIAN GAMING 35 driven directly by gambling as compared to the MICE trade and shopping. The Singapore Tourism Board doesn’t break down the gambling component in its assessment of visitor spending—lumping it instead under the broad heading ‘Sightseeing and Entertainment’ in its listing of visitor spending. And it hasn’t yet published even those figures for 2010—when the casino resorts opened in February and April, respectively. It seems additionally that the Singapore government especially doesn’t want the world to know how much of the gambling component to the city’s economy comes from local players. One of the Singapore casino operators has been relatively open on both these questions. Its Las Vegas Sands Corp (LVS)—developer and operator of the Marina Bay Sands (MBS) resort. Its earnings filings to the US Securities and Exchange Commission show that in the second quarter of 2011, 70% of MBS’s gross revenues came from gambling and 30% from non-gambling, including the hotel operation, food and beverage and retail. The split was US$594.6 million for the casino and US$180.3 million from other operations. That’s better than Macau’s 94% gaming to 6% non-gaming split (as estimated in a recent report in FinanceAsia), but far from Las Vegas’ 40% gaming to 60% non-gaming mix. Genting Singapore, the Singapore- listed operator of the rival casino resort, Resorts World Sentosa (RWS), follows the opaque approach of the city’s government and doesn’t give the split on gaming to non-gaming revenue. Even LVS only takes transparency so far when it comes to talking about how much business is being generated by local players rather than foreign visitors. In May, Michael Leven, the LVS President and Chief Operating Officer, gave Inside Asian Gaming some guidance without spelling out the actual numbers. He said the Singapore government had asked the company to ensure not more than 30% of all visitors to MBS are Singapore citizens or permanent residents. “We are basically told that as long as only about 30% of the people coming in are Singaporean, then it shouldn’t be a problem,” said Mr Leven. “If the amount of Singaporean attendance gets much higher than that, there may be some cause for concern. But to this day, only about 3% of the population of Singapore has ever played in a casino.” The Singapore authorities might be better to focus on intensity of play rather than headline numbers through the door. The casino entry levy was supposed to deter locals from playing, but there’s some anecdotal evidence that—in the case of the S$100 entry fee for a single 24-hour period—it actually encourages locals to play more intensively. That’s because many locals seek to get ‘value’from the levy by attending the casino twice in the allotted 24-hours. V. The ‘Dead’ Chip Industry In the 1980s, at around the mid-point of his casino monopoly, Stanley Ho developed Macau’s unique VIP market structure— involving operators of private VIP rooms and the rolling chip commission programme. It continues to generate the bulk of casino revenue in Macau and most of the other legal casino jurisdictions in Asia. In 2010, VIP baccarat was 72% of Macau’s US$23.5 billion gaming gross. That proportion looks set to rise in 2011. This trend has occurred despite the efforts of the Las Vegas-based operators—when they first came toMacau— to cut out the middleman. The first VIP rooms, locatedwithinDr Ho’s casinos, took on some of the administrative burdenofthegamingoperationsinexchange for a share of revenue. Meanwhile, junkets received a commission on the purchase of ‘non-negotiable’ (NN) or ‘dead’ chips by the players they brought in. The commission serves not only as a reward to junkets for bringing their clients to a particular casino, but also for extending credit to those clients, since the bulk of VIP gamblers in Macau nowadays hail from mainland China and are unable to bring large sums of money out of the country to play with. In addition, Singapore’s 2015 TourismTargets Indicator 2004 2015 Target Tourism Receipts (S$ billion) 10 30 Visitors Arrivals (million) 8 17 Tourism Employment 150,000 250,000 Source: Singapore Tourism Board ……..and also light on key gaming statistics Feature