• Sat
  • Dec 27, 2014
  • Updated: 7:52am

Singapore sets the bar high for casinos

PUBLISHED : Wednesday, 06 January, 2010, 12:00am
UPDATED : Wednesday, 06 January, 2010, 12:00am
 

Name? Check. Home address? Check. Identity card or passport number? Check. Total value of casino rebates and complimentary services received? Check.

Would-be high rollers hoping to test the tables at one of Singapore's two soon-to-open casino mega resorts will have to provide these details and more in order to comply with recently published regulations on VIP gaming in the city state.

For prospective gambling junket organisers, which are responsible for delivering the majority of casino revenue in places such as Macau and a number of which are listed on the Hong Kong stock exchange, the regulatory bar is set even higher. Junket organisers and agents must submit detailed financial disclosures, foot the bill for their own background checks and submit to finger and palm printing, among other measures.

Analysts say the toughness of the long-awaited measures are largely expected, and while Singapore may lose some high-stakes players as a result, its casinos are expected to rely far less on the high-volume, low-margin VIP market than Macau.

Still, the rules signal the regulatory environment that two of the world's most expensive casinos will face when they open in the first half of this year. Las Vegas Sands Corp is spending an estimated US$6 billion to develop the 2,500-room Marina Bay Sands - more than double the budget for the company's Venetian Macao, which opened in 2007. Malaysia's Genting Group is developing a 59-hectare Sentosa Island resort that includes a Universal Studios theme park at an estimated US$4.7 billion.

Singapore's VIP gaming rules were 'more stringent than the requirements in Macau but in line with our expectation', Morgan Stanley gaming analyst Praveen Choudhary wrote in a research note. 'The need to provide personal details of each junket player may deter players who prefer a discreet playing environment.'

Singapore's 2005 decision to formally end its 40-year-old ban on casino gambling was calculated in part to soften its traditionally prickly image, somewhat.

'We are not aiming to become like Las Vegas or Macau, where gambling is the main industry,' Prime Minister Lee Hsien Loong said five years ago when announcing the liberalisation. 'We will not allow casinos to sport garish neon displays on the facades and have jackpot machines everywhere from the lobby to the toilets.'

Indeed, the city's embrace of casinos has been cautious, and Singapore's pair of 'integrated resorts' look set to become two of the world's most tightly regulated casinos.

The rules for junket organisers, independent casino marketing agents that in Asia often assume the added functions of issuing credit and collecting debts, were published on New Year's Eve and appear to set a new industry benchmark for disclosure requirements.

Casinos planning to host players on a junket must provide Singapore's Casino Regulatory Authority with a report five days in advance that details its agreement with the junket organiser, including the commission rates to be paid. Casinos must follow up with an arrival report at least an hour before play begins, listing each player's name and biographical data.

For high-stakes players who sidestep junkets to deal directly with casinos, Singapore's anti-money-laundering rules require the resorts to file a currency transaction report on all transactions of more than S$10,000 (HK$55,570). This report, too, requires the player's biographical data.

In Macau, by contrast, currency transaction reports are filed only for transactions of more than 500,000 patacas. Industry sources in Macau say these are generally prepared by the junket organisers and tend not to list players' personal information.

The junket-dominated VIP segment accounts for about 65 per cent of all gaming revenue in Macau, and has propelled the city to its present status as the world's largest casino market. However, because a larger percentage of junket play is credit-driven, agents sometimes resort to extrajudicial means to collect debts in places such as China, where gaming debt is not enforceable through the courts.

Despite Singapore's stringent regulatory environment, in economic terms the city should be extremely competitive in the Asian VIP market.

The effective tax rate on VIP gaming revenue in Singapore is 12 per cent, compared with Macau's 39 per cent. This means casinos in Singapore are free to pay out higher rebates to the VIP players who do visit, as well as higher commissions to junket organisers who prove to be licensable.

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