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Singapore Weighs Gambling Costs vs. Tourism Gains

Posted on October 8th, 2010

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The gambling initiative in bringing casinos to Singapore, a notoriously strict city-state, seems to be producing results as tourist figures are climbing, fueling the hopes that the country’s export-dependent economy will now be more diversified. Singaporeans have struggled for years on the hopes of opening the first two casinos, which finally opened with a lot of fanfare earlier this year. Many residents and officials feared the two casinos would destroy the reputation of Singapore, an image anchored on a crime-free, family life. So far, the integrated resorts, as they are terms, seem to be a huge success.

The $ 5.5 billion Marina Bay Sands, which was developed by Las Vegas Sands Corp., has attracted five million visitors to its resort since late April, when its initial opening began. Nearly 300,000 tourists visited the facility to experience the panoramic terrace at the 57th fllor with an infinity pool on a ledge overlooking the rooftops of the city state. The complex will be welcoming from 70,000 to 80,000 visitors a day at the end of the year once it is fully open. Marina Bay Sands CEO Thomas Arasi noted the Las Vegas Sands casino which opened in Singapore earlier this year. He comments on the strategic location of the city-state and how the company has been doing great business so far. Aside from the Sands, another casino from the parent company Genting Bhd, based in Malaysia, has recently declared that its second quarter net income in its Singapore resort more than tripled after the successful opening of its $4.4 billion Resorts World Sentosa resort in February.

Analysts are already forecasting gaming revenue in Singapore could be higher than that of Las Vegas, perhaps as early as 2012. In the 12 months from July 2009 to July 2010, the Las Vegas Strip reported revenue of $4.92 billion, which analysts believe will be easy for Singapore to overtake. This, however, is far from certain, as there is doubt that Singapore can support the kind of traffic Las Vegas can. There are also many Singaporeans who are concerned about the possibility that organized crime and gambling may be a common occurrence in their country with casinos thriving. A local businessman has recently lost 26 million Singapore dollars (20 million euros) in a three-day gambling binge, local media reported. But it seems that the initial success of the casinos justifies the government’s decision in 2005 to approve them. The number of visitors in August reached a new record for the ninth consecutive month, largely because the casinos, with arrivals projected to reach 12.5 million in 2010 compared to the same period last year with only 7 million arrivals. Economists say they are increasingly comfortable the country can reach its goal of 17 million visitors and S$30 billion in tourism revenue in 2015. They are also increasingly convinced that casinos can serve as an anchor for the future of real estate development, as the facilities could attract more conventions and expatriates.

A new W Hotel is under development on Sentosa Island in Singapore, close to the Resorts World facility which has a luxury hotel with views of Marina Bay, Fullerton Bay, and only opened in July. Matthew Fry, senior vice president for acquisitions and development for Starwood Hotels and Resorts Worldwide Inc., which owns the W brand, said that he is looking at the possibility of working on another project in the district of Marina Bay, but refused to give details. He just remarked, “The casinos have really changed the image of Singapore, making it a more hip and happening place.”

The gambling practices of Singaporeans are worrying the government, though. This behavior, it believes, has the potential to disrupt society, if the residents become more dependent. Despite a S $100 fee imposed by government on citizens and permanent residents in Singapore to discourage them from entering casinos, more than a million locals have visited wither of the two casinos to date. The number of players in Singapore is “more than expected,” said Prime Minister Lee Hsien Loong in an interview in September. He added, “People are aware of Singapore’s stand because of the strong tourism figures.” However, the social costs will be something that needs to be observed.