Inside Asian Gaming

INSIDE ASIAN GAMING | December 2012 14 Singapore L auded for the immense profits its casinos have generated in only a few short years, Singapore is now discovering what it means to grow up. Its gaming market is nowmature in many ways, and seems to have succumbed to global economic headwinds. The two Singapore casinos reported a combined third quarter reduction in gaming revenue to the tune of 22% year-on-year and an EBITDA [earnings before interest, tax, depreciation amortization] decline of 29% year on year, according to a 26th November report from HSBC. Resorts World Sentosa was the better performer of the two. Its gaming revenue fell 17% and its EBITDA 19%, compared to the respective 27% and 36% reductions at Marina Bay Sands. After reaching a high of S$1.1 billion in gaming revenue in the first quarter of the year, the latter reported only S$772 million in Q3—a 30% decline. The two integrated resorts opened in 2010 and seemed to grow unstoppably during their first few quarters of operations. But things changed this year, and the first half of 2012 saw weakness at both IRs. Genting Singapore’s core net profit of S$393.6 million for the half was down 27% year-on-year and revenue of S$1.5 billion was down 9%. Sowhat happened? Analysts put forward a number of explanations, including mass- market reductions prompted by regulatory tightening and VIP declines driven by slowing economic growth internationally and in the key feeder market of mainland China, and a resultant reduction in credit extension by the casinos. “Any slowdown in China is going to disproportionately impact the Singapore casino market,” says a Singapore-based gaming analyst. “And if you also look at the difference between Singapore and all the other casino markets, you don’t have junkets here.” “MBS and Genting decided that the outlook is pessimistic and they shut down the granting of new credit, they won’t expand their loan books,” he continues. “Then the whole market freezes … because you don’t have junkets to fill the gap like in Macau.” Singapore Slows Down Revenues at the city-state’s casinos have recently gone into reverse. Alexander Lobov examines the causes and prospects going forward Luck did not favor the Lion City in Q3, with the decline in VIP volume accompanied by a substantial dip in the VIP win rate—with the fall in the latter potentially exacerbated by the increased volatility.