Singapore Makes Casinos An Offer They Can't RefuseSingapore’s two casinos came out of the gate strong in 2010 with estimated gross gaming revenue of US$6 billion. The city appeared poised to join Macau as a second Asian jurisdiction surpassing the Las Vegas Strip in GGR. But Singapore’s 2019 GGR was US$5.9 billion. Last week, Singapore granted Marina Bay Sands and Resorts World Sentosa long desired paths to growth, an offer they couldn’t refuse in the tradition of Don Vito Corleone.
Under arrangements involving four ministries – Trade and Industry, Finance, Home Affairs and Social and Family Development – Singapore’s so-called integrated resorts will increase their combined investment by two-thirds, each spending S$4.5 billion (US$3.3 billion) on new facilities, including expanded gaming. “The IRs’ investments will enhance the vibrancy and tourism appeal of their offerings to remain competitive with other destinations in the region, and bring in more than half a million additional visitors annually,” the ministries’ joint announcement declares. The IRs had their duopoly extended until at least 2030; Union Gaming analyst Grant Govertsen dismisses the previous risk of a third IR as “effectively nil anyway.”pengeluaran sgp
Each IR has its own expansion requirements. MBS – vying with Galaxy Macau for the mantel of world’s most profitable casino property – will build a 15,000 seat indoor arena at the foot of a 1,000 suite luxury hotel tower, plus additional MICE space. The new tower, on a lot owner Las Vegas Sands and founder Sheldon Adelson have long coveted across the street from the current three hotel towers, sounds like a mini MBS, with a dramatic atrium and rooftop pool area featuring “signature” dining.
The arena fills a gap in Singapore’s concert venue menu. “A new 15,000 seater would certainly be a plus,” Brewerkz co-founder Devin Kimble says. The microbrewery, which Kimble sold in 2013, has an outlet at 12,000 seat Singapore Indoor Stadium, nearly 30 years old and noted for poor acoustics, concert goers complain.
The MBS additions will likely link to the existing complex via an underground network that already crosses city streets to connect the hotel, gaming, retail and convention components, and also has a MRT train station.
For RWS, the expansion is more complicated. It will add two new sections to its Universal Studios theme park, enlarge S.E.A. Aquarium into Singapore Oceanarium, convert its theater into “Adventure Dining Playhouse” and redevelop waterfront areas with a free wow factor attraction, public event space plus a retail and dining promenade. RWS will also add two new hotels with a total of 1,100 keys and increase MICE space by 11,000 square meters (118,360 square feet).
According to analysts on a conference call with RWS parent Genting Singapore, the major new amenities will come on line in 2024 and beyond. In contrast with the MBS expansion, RWS changes will disrupt some current operations.
In exchange for these investments and subject to development thresholds, the government will let each IR expand its current 15,000 square meters of casino space: 2,000 additional square meters and 1,000 more electronic gaming machines for MBS; 500 square meters and 800 machines for RWS.
Explaining the disparity, the ministries tell Forbes.com, “Each IR made an independent assessment of what they would require and eventually we arrived at commercial arrangements that each IR was comfortable with.” RWS didn’t respond to a similar inquiry.
While additional income streams will come later – after substantial investment – Singapore has already begun taking payment. As of last Thursday, the casino entry tax for Singapore citizens and permanent resident rose 50%, to S$150 for 24 hours or S$3,000 annually per casino. Furthermore, in 2022, Singapore will increase casino tax rates by three percentage points, to 8% for VIPs and 18% for mass play. Rates could rise another four points in each category for an IR failing to fulfill investment commitments. Operators also pay an additional 7% sales tax on net win, and that rate will increase to 9% between 2021 and 2025.
Union Gaming says the higher entry fee will decrease Genting Singapore’s GGR by 15% and possibly drive gamblers to nearby low airfare destinations. Morgan Stanley analyst Praveen Choudhary estimates the entry tax increase will cut GENS Ebitda 2% now, and the 2022 tax hike will trim another 6%. On the other hand, JPMorgan analyst DS Kim tallies RWS improvements adding just S$0.02 to its share value.
Sanford Bernstein analyst Vitaly Umansky acknowledges the costs, but sees expansion as positive overall for Genting Singapore, and still rates stock “outperform… taking GGR market share and showing operational improvement in [its fiscal first half].”
The big winner here is Singapore, which adds an arena and waterfront plaza to its IRs amenities collection, plus significant new revenue. To paraphrase another often quoted American fictional character, the government has gotten the IRs to pay today, and again and again, for a hamburger many Tuesdays away.
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