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Singapore Casinos Continue Tackling Issues Months After Opening

Posted on November 27th, 2010

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The roots of the casino gambling argument in Singapore started in 2002, when an analysis was released, echoing what many thought was a danger in Singaporean society. Part of the analysis paper that was made public in 2004 went: “There may be economic merits to setting up a casino in Singapore. But the social impact is not negligible. By making gaming more accessible and even glamorous, it could encourage more gambling and increase the risk of gambling addiction.” The analysis was written by no less than Lee Hsien Loong, the son of then Prime Minister Lee Kwan Yew. The author of the statement was then prime minister in waiting and wrote the statement as head of an economic task force that evaluated a proposal during that time for a casino to be built in the city state. In the same 2004 paper, Lee argued that the country should be ahead of its neighbors in the tourism industry by making available “integrated resorts”. With the suggestion of the integrated resorts, however, also came talk that one of the components of these resorts would be gambling facilities. Thus, the analysis of the younger Lee was seen as a camouflaged endorsement of casinos.

With the Singaporean public now made more aware of the analysis, a strong opposition to the planned resorts formed. The population of Singapore was split into those who expressed support and those who expressed dissent, a rarity in a country with citizens who have most often given support to any government initiative. More figures and studies came out, like the one done by the Association of Women for Action and Research which proclaimed estimates that casinos would deprive the families of the country more than S$500 million (US$355 million) every year because of possible problem gambling. More than 30,000 people gave their names to an online petition which protested the resorts.

But with the two casinos now standing and seemingly doing fine, new issues have risen. An example of the current issues that have the possibility of getting bigger in the future would be VIP clients, or patrons who place a deposit of more than S$100,000 on the casinos. These so-called VIP clients are currently giving a lot of revenue to the two casinos, so the casinos may give them preferential treatment. Aside from the 7 percent goods and services tax imposed to all patrons, the VIPS are only taxed 5 percent as opposed to the 15 percent imposed on the mass market. However, the regulators of Singapore gambling have placed restrictions on junkets, which should encourage more VIP clients as they provide credit to them. Moreover, regulations also require casinos to notify authorities before a junket VIP arrives. This is something VIPs do not really like, as they would rather be discreet. As of the moment, there are still no junket agents that have been licensed. It is widely believed that the Casino Regulatory Authority of the country does not mind any interested parties. However, there is talk that possible approvals may be done to junket agents by next year.

With the current set-up of the absence of junkets, casinos are the only liable party to whatever credit is being granted to VIPs. Felix Ling, managing director of Platform Asia explained, “RWS tried to impress the market with huge self-churning through a large amount of credit exposure. The third-quarter results show it could not sustain such a heavy hand.” Another issue on the horizon for the two casinos in integrated resorts would be visitor arrivals. With the Asian economic recovery, arrivals to the city state have shattered records. However, foreign tourists may not really be a safe bet for these facilities. Singapore continues its reputation as more of a strict, straight-laced and expensive destination.

Asian families may consider the IRs, but with expensive accommodations, it may be impractical. The rates offered by the resorts mostly match business travelers who may pass whatever they spend on their company tab. This may mean that more affordable and wholesome destinations may be in tow so that more people can be attracted. Ironically, this may actually be what the Singaporean government is hoping for: a shift of emphasis away from the casinos.