ANALYSIS: Integrated Resorts problem in the country, and he expects this will be a continuous process, which could hamper growth. “We believe these concerns about social problems and potential illegal activities also drove the tight junket operator reviewing process. As a result, we don’t currently expect junket operations to have a significant impact on the gaming industry in Singapore.” he says. APG’s Macau Ciarán Carruthers says if the regulatory reins get pulled even tighter, this will undoubtedly make their ability to compete in this space much more difficult. More and more countries around the region are looking at casinos as a viable form of revenue and job creation, and eyeing the lucrative junket market to bring in significant revenues from high net worth individuals from overseas. “As competition heats up here, and junkets are provided an ever increasing range of options to choose from, it is hard to see anything but hard times ahead for Singapore’s junket efforts,” he adds. New casinos, new competition And there is always new competition from the slew of new casinos expected to be opened in regional Asia. One brokerage analyst says he doesn’t think that any new casinos in the region will have a material impact on Singapore. In other countries, the fortunes of casinos are tied to the local economies. “The Singaporean casinos are unique in the sense that they are marketed at tourists and high net worth individuals who have parked their fortunes in Singapore,” he adds. Barclays Wai Ho Leong also does not foresee the competition as significantly affecting Singapore. The properties proposed in Taiwan are much more modest in terms of scale - catering to Mainland visitors across the Straits - so is unlikely to compete with the integrated resorts in Singapore. Second, he adds, there are very few destinations that offer a complete experience for visitors – for families and business traffic. The competition in this case is only confined to Macau or Australia. “Singapore’s model is that the casinos feeds off the strong visitor traffic that come for other reasons. Not the 28 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012
other way around,” he adds. New casino licenses Govertsen says he does not think regional gaming expansion is likely to have anything but a small impact on Singapore. The jurisdictions that are Ciaran Carruthers expanding, or potentially expanding, such as the Philippines, Taiwan, Russia (Vladivostok) and Japan, are generally geographically far enough away from Singapore as to not be competing for the same customers, he adds. APG president Carruthers says the new casino resorts being planned Grant Govertsen for Manila, for example, will offer the junkets everything they need to attract their players, it has greater proximity to key markets such as China, Hong Kong, Taiwan, Japan, and Korea whilst also having better proximity to South East Asian junkets than Macau has. “Add to this Wai Ho Leong a less restrictive regulatory structure from a regulator that is encouraging foreign play as opposed to local and with comparable tax rates but lower operating costs that allow for higher commission rates, and you provide the Singapore operators a very tough uphill battle if you make already tough restrictions even tougher,” he says. More challenges could lie closer to home, especially if Singapore decides to grant any new casino licenses. The current operators have exclusivity until 2017, so now is the time new entrants would be circling to start construction. Union Gaming Group’s Govertsen says there would be high levels of interest on the part of existing gaming operators who would be interested in operating in Singapore. However, he does
not think the government is entertaining thoughts of awarding new gaming licenses, especially in the context of what appears to be an increasingly conservative gaming regulatory regime. Standard and Poor’s director Poon says although the two casino operators enjoy a duopoly position in Singapore until 2017, he believes the Singapore government will be extremely cautious in granting additional casino licenses because this will intensify competition and might not bolster the economy sufficiently. Future considerations Galaviz & Co. managing director Jonathan Galaviz says he does not believe additional IR’s or casinos in Singapore will add anything incrementally useful to the current tourism value proposition of the country. Any future consideration for additional casino licenses should be researched thoroughly to ensure that they would not accelerate any social ills that seem to be increasing in the country. “In addition, if additional licenses are considered, they should be considered in the context of things such as concepts that go beyond the traditional Las Vegas-style IR model,” he adds. APG Macau’s Carruthers says the current operators will enjoy a period of exclusivity till 2017 before any new licenses could be issued and you could argue that an additional casino resort in Singapore would help make the market more attractive to players and tourists by adding yet more variety and that this in turn would further grow the market.