Inside Asian Gaming

INSIDE ASIAN GAMING | October 2012 32 Market Outlook But as the analyst points out, for now this is pie in the sky. Only one clearing bank exists outsidemainlandChina—and that is inHong Kong—and it is far from assured that RMB clearing in Singapore would translate into junket approvals and regulatory loosening. And while the junket debate continues there is evidence that the CRA is already cracking down on operators on entirely different grounds. Resorts World Sentosa recently was fined S$600,000 (US$487,132)— the highest single financial penalty ever imposed by the regulator—for rebating portions of the annual entry levies the government requires of Singapore citizens wishing to enter the casinos. The CRA charged that about 3,400 Singaporeans were reimbursed in the formof tickets to the resort’s Universal Studios theme park, concert tickets and hotel accommodations during the first and second quarters of this year. The government is sensitive to circumvention of the laws it has in place to protect the local population from the scourge of problem gambling. Despite evidence to the contrary—the National Council of Problem Gambling says the overall gambling rate actually fell to47% in2011 from54% in2008— many among the local population believe gambling is on the rise. The government is sensitive to circumvention of the laws it has in place to protect the local population from problem gambling. Despite evidence to the contrary, many among the local population believe gambling is on the rise. This is in part fueled by sensationalist reports in the local media of lower-income Singaporeans developing gambling addictions and turning to crime, a phenomenon that statistically remains practically immaterial. But a 5th September report by The Wall Street Journal , citing the National Addictions Management Service, noted that gambling among lower-income Singaporeans is on the rise, as is the number of people seeking help for problem gambling. “We note from [the NCPG survey] that problem gambling issues in Singapore are largely contained,” Singapore’s Ministry of Community Development, Youth and Sports told the paper. “However, we prefer to be proactive [in tackling gambling-related social problems]. The experience from other jurisdictions tells us that it usually takes three to five years for the situation to stabilize.” Twenty to 30% of the casinos’ visitors are estimated to be local. But while tougher regulations on locals could hurt operators, analysts don’t believe the impact will be felt in the mass market, where lower-income players usually participate. “I’m not so much concerned about the impact on the mass market,” says the Malaysia-based analyst. “The reason being that if you look at the number of visitors that go to the Singaporean casinos and look at the number of tables available there, taking a simple average number of visitors divided by the number of tables, on average about 75 visitors visit one gaming table. InMalaysia it’s about 100 because there’s only one casino. In Macau the number is 15. So 75 is not too bad. Even if they crimp visitation by Singaporeans it won’t affect their business too much because if there’s one visitor that can’t make it there’s another one that will fill their place.” The analyst notes that Las Vegas Sands Corp’s Marina Bay Sands may be hurt more than its counterpart in Sentosa if the mass marketdoessufferfromfurtherrestrictions— simply due to the ease of access at MBS—but he also believes that the VIP segment of the market is where operators are likely to have greater regulatory anxiety. InJuly,thegovernmentannouncedaslew of proposed changes to the Casino Control Act and invited feedback from the public. The changes include a higher maximum fine for serious violations of the act—up to 10% of gross gaming revenue from the current S$1 million—and restrictions on junket operators. But it’s the amendment concerning VIP credit that could carry the most risks for operators. Currently, high rollers have to put down a deposit of S$100,000 before taking credit in VIP areas. But it only acts as collateral in case gamblers fail to repay. Under the proposed new regulations, they would have to draw down that $100,000 before credit could be extended at all. “I think that has a psychological impact on gamblers,” says the Malaysia-based analyst. “If they run out of their deposit then they’re not inclined to gamble anymore.” The credit amendment was enough cause for several banks to downgrade the stock of Genting Singapore after the announcement. But its parent company in Malaysia could well be the beneficiary of any negative impact on VIP volumes. For while mass-market players would have less flexibility and inclination to make the trip The analyst notes that Las Vegas Sands Corp’s Marina Bay Sands may be hurt more than its counterpart in Sentosa if the mass market does suffer from further restrictions—simply due to the ease of access at MBS.