Inside Asian Gaming

INSIDE ASIAN GAMING | June 2013 10 COVER STORY much larger pool of VIPs providing sufficient liquidity to avoid regularly deviating too far from theoretical win. The reason for the limited supply of VIP players in Singapore, of course, is that Macau-style junkets are barred from plying their trade in the Lion City. These junkets recruit players from mainland China—the world’s richest repository of high-rolling gamblers—and bring them to casinos in Macau. The junkets provide the vital functions of extending credit to the players and then collecting debts back on the mainland. The VIPs would be unable to gamble in Macau without credit from the junkets, owing to the Chinese government’s restrictions on its citizens taking money out of the country. The other consideration is that gambling debts are not legally enforceable in China, so casinos that extend credit themselves to mainland customers have no recourse to pursue errant debtors through Chinese courts. The junkets currently active in Macau would gladly work with Singapore’s casinos in order to offer their clientele a greater choice of venue and also potentially to partake in the greater incentives enabled by the city-state’s much lower tax rate on VIP play—12%, which includes 5% on the gross and 7% goods and services tax, versus 40% on the gross in Macau. But the Singapore government, understandably Marina Bay Sands turned in adjusted earnings before interest, taxes, depreciation and amortization of US$397 million in the first quarter of this year, though adjusted for luck it would have been $451 million. Quarterly Gaming Data of Singapore’s Integrated Resorts 1Q ‘12 2Q ‘12 3Q ‘12 4Q ‘12 1Q ‘13 YoY chg QoQ chg Marina Bay Sands VIP chips volume (US$m) 12,805 11,506 11,791 16,467 18,207 42.2% 10.6% VIP volume mkt share % 51% 52% 53% 52% 51% 0.2 pps - 0.4 pps VIP chips win % 3.58% 2.42% 1.79% 2.14% 2.51% - 1.1 pps 0.4 pps VIP revenue (US$m) 458 278 211 352 457 - 0.3% 29.7% VIP revenue share % 53% 46% 42% 44% 56% 2.6 pps 12. 2pps Mass revenue (US$m) 259 268 272 268 277 7.0% 3.3% Mass revenue share % 52% 53% 53% 52% 52% 0.4 pps 0.2 pps Slot revenue (US$m) 148 143 136 145 142 - 4.0% - 2.2% Slot revenue share % 57% 57% 57% 57% 59% - 2.0 pps - 3.0 pps Resorts World Sentosa VIP chips volume (S$m) 15,375 13,376 12,975 18,720 21,218 38.0% 13.3% VIP volume share % 49% 48% 47% 48% 49% - 0.2 pps 0.4 pps VIP chips win % 3.39% 3.10% 2.80% 3.00% 2.12% - 1.3 pps - 0.9 pps VIP revenue (S$m) 521 415 363 562 450 - 13.7% - 19.9% VIP revenue share % 47% 54% 58% 56% 44% - 2.6 pps - 12.2 pps Mass revenue (S$m) 307 295 298 307 316 3.0% 3.1% Mass revenue share % 48% 47% 47% 48% 48% - 0.4 pps - 0.2 pps Slot revenue (S$m) 140 135 129 133 144 3.0% 8.5% Slot revenue share % 43% 43% 43% 43% 43% 2.0 pps 3.0 pps Source: Company data, analyst estimates