Inside Asian Gaming

INSIDE ASIAN GAMING | June 2013 6 COVER STORY S ingapore’s casino industry got off to a roaring start in 2010, accelerating from zero to over US$1.2 billion in quarterly revenue across two properties in the space of a few months. Then, almost as quickly as it ramped up, the business began to plateau, with market-wide revenue settling at US$5.85 billion in 2012 and registering a slight decline in the first quarter of this year. The chart below shows quarterly revenue from the start of Singapore casino operations in 2010. The casino at Resorts World Sentosa, operated by Genting Singapore, opened its doors on the first day of Chinese New Year in 2010 (which fell on 14th February). Las Vegas Sands Corp’s Marina Bay Sands commenced operations two months later on 27th April. The 1Q 2010 Singapore gross gaming revenue tally was, therefore, generated by one property, in operation for only half the quarter, still working out the myriad kinks that manifest themselves following the opening of a market-first multibillion-dollar property. Thus, a big quarter-on-quarter revenue spurt going into 2Q 2010 was inevitable, as was an inflated year-on-year comparison by the time the 1Q 2011 figure came out. The RWS casino hit its stride within a few months. The smart money was always on Genting getting off to a quick start, leveraging the considerable competitive insights and assets it had gained from operating a monopoly casino in Malaysia since 1970, including an intimate familiarity with the wants and needs of players from Malaysia and Singapore and an extensive base of customers—many of whom belong to its loyalty card program— in the region. Though LVS had already gone through a tough but enlightening Asia- acclimatization process with Sands Macao and The Venetian Macao, the company’s Profitable Plateau The Singapore gaming market was recently characterized by a financial analyst as “flatish and boring”. Industry observers bemoan the lack of impetuses to get Singapore’s casinos back on a strong growth track. But how real or sustained was the strong growth they yearn for? Singapore Quarterly Gaming Revenue Source: Bloomberg and J.P. Morgan estimates 2,400 40% Gross gaming (LHS) yoy growth (RHS) 30% 20% 10% 0% -10% -20% -30% (S$ m) 2,000 1,600 1,200 800 400 0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13