Inside Asian Gaming

INSIDE ASIAN GAMING | April 2012 30 “Mr Huang is probably in the top three in terms of junket operations in Malaysia. He drives his customers to Resorts World Genting, Cambodia, and now Singapore. Mr Low is probably somewhere in the top ten [in Malaysia] and has a very similar profile to Mr Huang. Both have had very little exposure to junket players outside Malaysia. “Malaysian junkets already have funds transfer channels between Singapore and Thailand—consisting of the Indian money- changer network that dominates these three countries. The funds channelling network in China, Macau and Hong Kong is completely different and made up predominantly of southern Chinese [participants]. “Thoughtherearesomechannelsalready in place for funds transfer from Malaysia for [casino] players going to Macau, there are no real channels [currently] for Chinese Rmb going into Singapore [for gambling]. “ Sheldon Adelson, Chairman of Las Vegas Sands Corp, the developer and operator of Singapore’s other integrated resort, Marina Bay Sands, hasn’t— to Inside Asian Gaming ’s knowledge—actively spoken against having Singapore junkets. But unlike RWS, he hasn’t applied for them either. But Mr Adelson did claim last year that illegal junkets were already operating in the Singapore market. In April last year, he caused ripples at a JP Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum in Las Vegas by saying he had personally blocked a US$5 million transaction between Macau and Singapore from a named person not previously identified as a high roller, stating the person was “obviously a junket rep”. In any case, analysts differ on the short term impact of the legalised junkets to the market. John Oh of CLSA Asia-Pacific Markets said in a note: “More important, though, is the signal that the Singapore administration is not averse to allowing IMAs to operate in the market, and this in our view is the beginning of more IMAs being licensed over time. It remains highly academic to quantify the potential impact to either Las Vegas Sands or Genting Singapore for now, but rest assured that we expect VIP rolling chip volumes to take on a new trajectory of growth and will reinvigorate Singapore’s gaming market, which has been otherwise labelled as “flatish” and “boring”. We forecast that Singapore gaming revenue will grow by +15% from US$6 billion in 2011 to US$6.9 billion in 2012, of which hold-adjusted VIP revenue will grow 11% this year.” Grant Govertsen of Union Gaming Research Macau sounded a note of caution on the impact of the IMAs. “At this point, the CRA has not yet approved any junkets who wish to operate at Las Vegas Sands’ Marina Bay Sands. The junkets will receive one-year licences. We note that the CRA’s language is quite forceful, suggesting licensees will be continually subjected to suitability tests upon pain of revocation. A condition of the approval is that junkets only target foreigners—suggesting that locals are off- limits. We think junket approval will remain slow and small.” Cameron McKnight, Senior Analyst at Wells Fargo, said: “In our view, junkets in Singapore are unlikely to play the pivotal role they do in Macau, and their activities are likely to be very tightly controlled. There are several reasons for this view: “Singapore’s strict licensing criteria and extensive background checks will likely limit the pool of potential junket operators. The fact that only two new junkets were approved but the applications of 12 were rejectedbears this out. Singapore’s very strict gaming regulations are designed to protect its position as a key Asian financial hub. “Singapore junkets will be unable to plug into Macau junket networks. The CRA released revised regulations that specifically prevent the sharing of junket commissions with unlicensed parties. Effectively, this means that registered junkets in Singapore will not be able to act as a shop front for Macau-based junkets or tap into their networks or capital bases.” Feature