Singapore Places Dual Wager With Massive New Casinos

Anxious to boost revenues in a time of economic uncertainty, the Singapore government legalized gambling. It sold lucrative gaming licenses and levied a tax on winnings. But the advent of state-sanctioned gambling brought a rise in social problems such as addiction and crime and within three years, the government closed the gaming houses.

That was in 1823, four years after Sir Stamford Raffles first unfurled the British flag on the island of Singapore. Some 187 years later, Singapore is hoping its latest experiment with legalized gambling turns out rather better.

The first of Singapore’s two super-casinos, the $4.5 billion Resorts World Sentosa, flung open its doors on the auspicious first day of the Lunar New Year, Feb. 14. The $5.5 billion Marina Bay Sands will follow on April 27.

Setting aside its deep-seated puritanical instincts, the ruling People’s Action Party has made a big double bet. Firstly, that the casinos will attract enough punters to allow the operators, Malaysia’s Genting and America’s Las Vegas Sands, to recoup their massive investments and boost the wider Singapore economy. And secondly, that the casinos can thrive without leading to an increase in prostitution, addiction and organized crime, the sort of problems that tend to proliferate around gaming houses in Asia.

At stake is Singapore’s carefully cultivated image as a safe and orderly commercial hub and the domestic credibility of a government that claims legitimacy from always knowing best.

The government’s decision to legalize casino gambling in 2005 sparked a rare public debate. Its rationale was economic, with Prime Minister Lee Hsien Loong saying in 2005 that he wanted to give Singapore the “buzz” that you get in London, Paris or New York to ensure that tourists and expatriate workers keep coming. In particular, the government was said to be counting on cash-rich mainland Chinese who are looking for places to lay bets far from prying eyes in Macau, which is much closer to mainland China but which has operatives watching for officials seeking to gamble away government funds.

The two casinos are crucial to the government’s target to attract 17 million visitors by 2015, up from the 9.7 million tourists last year who spent $8.9 billion, according to the Singapore Tourist Board.

The government, which has warned that the economy must be radically retooled if it is to achieve solid growth, hopes the revenue from the tax on casino winnings as well as other spending by casino visitors will provide a much-needed lift to its coffers.

Having euphemistically dubbed the casinos “integrated resorts,” the government hopes that, in time, the attached hotels, restaurants and theme parks will generate the bulk of the revenue, reducing Singapore’s dependence on the pure gambling take.

Just more than a month after the soft opening of the first casino, it is too early to say whether Lee can succeed where the British failed. So far the signs are mixed. On the social front, the government has banned more than 29,000 bankrupts and those receiving state benefits from entering the casinos and has tried to convince families of gambling addicts to have them excluded.

It has insisted that Singaporeans pay a hefty entry fee of 100 Singapore dollars ($71) a day or 2,000 Singapore dollars a year to make them think twice before heading to the baccarat tables or slot machines.

But there have already been a number of casino-related problems. Several people were charged with trying to cheat the house and petty crimes such as mobile phone theft.

On the financial front, the challenge is perhaps even tougher. The government in January decided to severely restrict the operation of Macau-style junkets, the middlemen who bring in high-rollers in exchange for commissions. In Macau, junket-assisted VIP gamblers are believed to account for about 60 percent of gaming revenue. This approach makes it less likely that Singapore will suffer the vice and violence that sometimes accompanies the junket business in Macau. But it will make it much harder for the casinos to bring in the crucial VIP gamblers.

Anecdotal reports suggest that Resorts World, which is on the entertainment-focused island of Sentosa just off the southern coast of Singapore, has been reasonably busy since it opened. The company remains tight-lipped. Resorts World is reported to have received 35,000 punters in its first two days, compared with the 114,000 that passed through the doors of the Venetian in Macau when it opened in 2007.

A research note released by Credit Suisse recently suggested that the levy may be putting off many locals, depriving the country of casual gamblers. “We are surprised that not a single taxi driver we questioned has been into the casino yet, due to a casino levy imposed by the government,” analyst Loke Foong Wai said.

Credit Suisse is among the bears on Singapore’s casino industry. Market expectations for 2010 casino revenue range from $3 billion to $6 billion, Credit Suisse is projecting $2.6 billion.

By contrast, Las Vegas’s 37 casinos generated $6.1 billion in 2008, while Macau’s 31 casinos generated $13.5 billion.

If Singapore were to overtake Las Vegas in its first few years, it would be some achievement. But the danger is that, in the rush to recoup the huge outlay by Las Vegas Sands and Genting, the casinos and the government will be forced to put caution to one side.

“My concern is they overspent on the two integrated resorts,” said Ronald Tan, a Singaporean gaming consultant, in an interview with the state-controlled Straits Times newspaper. “Instead of allowing both casinos to open in a more relaxed way during the first few years, the IRs are now under tremendous pressure.”

The government will have to pull off a delicate balancing act to ensure that success on the gaming tables does not prove to be, in Raffles’ words, “highly destructive to the morals and happiness of the people.”

Thank To : thejakartaglobe.com

• UPDATE 1-MGM-branded casino planned for Vietnam resort area A group backed by hedge fund Harbinger Capital Partners plans to open in early 2013 Vietnam's first Las Vegas-style casino resort in a coastal area to be called the Ho...
• Sands' $5.5 bln bet on Singapore looks to be paying off Las Vegas Sands' bet on gambling-wary Singapore may be paying off. The world's most valuable casino firm said its $5.5 billion casino resort in the city state is on track...
• Island gambles on attracting Chinese investors Sentosa Island, a former fishing village off the coast of Singapore, is reinventing itself as a magnet for Asia's megarich, with new casinos, a Universal Studios theme park and chic...

• Scooping the Ball Common Complaint: Scooping the Ball When it comes to chipping, especially when you are chipping over sand, there is a natural tendency that many people have, which is often to...
• China, on cusp of superpower, faces environmental strain [/caption] By Calum MacLeod, USA TODAY BEIJING — This year, China will leapfrog Japan to become the second-biggest economy on Earth, behind only the USA, predicts Ting Lu, a China...
• Macau Casinos Continues Redundancies Things have gone so snake-eyed in Macao, the tiny gambling mecca on the southern coast of China, that the Venetian resort fired half its gondoliers two weeks ago. Only two...