High Mass
The main floor could be the key to MBS’s gaming success
If premium play is not going to be the powerhouse of the gaming operation in Singapore that it is in Macau, what about the mass floor at MBS? In appearance, the main floor owes much to the stadium-style gaming space created by Paul Steelman at Sands Macao, with its concentric rings of balconies looking down into the ‘cockpit’ of the table gaming area. At around 161,000 square feet, the MBS main casino floor is more spacious than that of Sands Macao, though according to the company MBS will (initially at least) have fewer tables—600-plus compared to Sands Macao’s 740. MBS is also scheduled to have 1,500-plus slot machines, compared to Sands Macao’s 1,250.
Tom Arasi, President and Chief Executive Officer of MBS, said at a press conference that the property is concentrating initially on the proven most popular table games in Asia and Southeast Asia.
“We decided to stick with the six or eight major games,” said Mr Arasi.
“We made sure our people were well trained on those games. We wanted to make sure the staff were quite focused before we got into some of the more speciality gaming tables and devices.”
Old favourites
It appears from IAG‘s brief visit to the main floor that the table games are mainly given over to the two workhorses of Asian table play—baccarat and blackjack—with smaller representation from other games popular in Southeast Asia, including roulette and sic bo.
Minimum table bets on the main floor when we visited appeared to be set at S$50. That’s the equivalent at current exchange rates of HK$280, and therefore 40% higher than the minimum bet typically seen on the main floor in many Macau casinos. Minimum bets are of course only a rough guide for predicting mass floor revenue, given that casino managements can use back of house and tableside technology to adjust instantly their minimum bet levels in line with peak or quiet periods on the floor.
If anecdotal reports of the early performance of Resorts World Sentosa are a guide, it seems slots are likely to be a much bigger component of gross gaming revenue in Singapore than they are in Macau (where they currently contribute around 5.5% of the gross). This isn’t necessarily at odds with Mr Leven’s suggestion in our interview with him that mass-market tables will be the main revenue earner at MBS. But it does hint at the fact that Singapore, unlike Macau pre-market liberalisation, does already have a base of players well educated in slot products thanks to Singapore’s slot clubs sector.
Club’s house win According to industry sources, some of the bigger slot clubs in Singapore were regularly producing house win equivalent to US$2,000 per machine per day prior to the opening of the integrated resorts (IRs). The only regional gaming market IAG is aware of that can beat that is Vietnam, where some machines have been known to bring in US$3,000 per day. Such a high house win per day can be a function of low machine numbers rather than necessarily high consumer demand. It certainly suggests a market capable of supporting more slot product.
“The bigger slot clubs in Singapore were producing house win per unit per day of US$2,000 on a return to player (RTP) of only 82%,” says one source familiar with that sector.
“Anecdotally, I’ve heard some machines at Resorts World Sentosa have been doing [win of] US$1,800 per day,” adds the insider.
Mr Adelson may be correct in saying the Singapore IR market is not a zero sum game involving one resort succeeding on the failure of the other. It’s difficult, however, to see how Singapore’s casino resorts can succeed in the slot segment without that success coming at the expense of the citystate’s slot clubs.
Return to player
Return to player percentage on slots in the Singapore IRs has been set by law at 90% of theoretical win [according to the Casino Control (Gaming Equipment) Regulations 2009]. In the slot clubs, the existing tax burden forces the clubs to run at 82% RTP, say industry sources. An RTP of 82% makes it hard for club players to have much fun or even gambling entertainment.
In fact, the Singapore slot club RTP is so low it would actually be illegal in some other gaming jurisdictions such as New South Wales in Australia.
Previously, Singapore slot players had no alternative. Now, with the advent of the Singapore IRs they clearly do have a choice, and one offering the very latest machines and the latest and most plush décor and amenities. One interesting question is whether those local slot club players will decide it is worth paying a daily entry fee of S$100 (or annual fee of S$2,000) to get access to the better product and better RTP at the IRs. An industry source with knowledge of both segments gave IAG a perspective on this.
“If you sit at a machine for a couple of hours, and take S$100 to gamble with, you’ll find if you’re in a [Singapore slot] club, you’ll have lost it after a couple of hours. In either of the casinos, you’ll still have 50 bucks left. That’s the best way of comparing the slot clubs and the casinos.”
So the message seems to be that the longer a local Singapore slot player wishes to play for entertainment purposes, the more likely they are to opt to pay the entry fee at the casinos. At the IRs, the players get not only newer machines, but also more options to play more lines.
“What they’re used to if they’re Singapore slot club players is a very tough 82% RTP with five line games, nine lines maximum bets,” the industry source tells IAG.
Tax issues
“The way the tax on club gaming is structured, the clubs can’t make any money unless they set the RTP at 82%. What the players are getting [in the IRs] is an RTP set at 90% minimum, with 25, 50 and 100 lines. The casinos in Singapore are not allowed to operate their games under 90% RTP. That can be a combination of a machine and a link. But it has to be overall a return [to the player] theoretically on the machine of 90%.”
In Macau, low denomination machines are available in as little as HK$0.02 or HK$0.01 multiples in some casinos. That doesn’t even register on the scale in Singapore dollar terms. In the Singapore IRs, the lowest denominations are typically S$0.05 to S$0.10. That’s equivalent to HK$0.28 to HK$0.56 per bet. Given the differential on currency exchange rates and Singapore’s much lower tax rate (15% gaming tax in the mass segment plus 7% Goods and Services Tax, versus Macau’s 39% on the gross), it’s not hard to see how Singapore’s IRs can potentially produce a better yield per slot player despite the higher wage costs and general overheads associated with doing business in Singapore.
“There are a lot of two cent machines in the Singapore IRs,” says the industry source.
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“A 50-line two-cent machine means a [Singapore] dollar bet. That’s the equivalent of more than five Hong Kong dollars, which in Macau would be approaching the VIP slot market segment.
Common denominations
“At Genting [RWS], you have 100-lines games from Aristocrat and you’ve got 50-line bets for everybody else. The 100-line games are not super popular in RWS at the moment. The 50-line games are, and the low-denomination is at the moment dominating—that means under ten [Singapore] cents (HK$0.28). The five- and two-cent games are, I think, going to be the winners [in Singapore],” explains the insider.
“Now two casinos are there, overnight the club industry has fallen from 100% of the market to 35% of the market, though admittedly the market itself is also growing. By this time next year, the club market share could be as low as 25%.
“I think by the third quarter this year, the Singapore casinos will start to see momentum really taking off.”
