Inside Asian Gaming

October 2010 | INSIDE ASIAN GAMING 27 Singapore Outlook message was clear. “This signal is to reinforce the point that they [the casino operators] are not supposed to go after the low-hanging fruit which the local market represents, but instead to focus their effort on winning additional tourists from abroad,” stated the minister. “The IR operators have been reminded that they must comply strictly with our rules against casino advertising to locals. “These rules will be tightened as necessary in the light of experience,” Mr Balakrishnan added somewhat ominously. The case against the industry Since Resorts World Sentosa (RWS) and Marina Bay Sands (MBS) opened, they have both targeted Singapore slot club players, one more so than the other. RWS had membership stalls set up in what is known locally as ‘The Heartland’. This is the zone where many low- to middle-income Singaporeans live in Housing and Development Board (HDB) apartments. These are areas like Ang Mo Kio and Toa Payoh, where RWS had stalls offering free membership focussing on residents. The population in these areas is predominantly Chinese. Singapore’s 70 or so licensed slot clubs have certainly been hit by the opening of the IRs, experiencing a fall of 30% to 50% in their takings. Part of the problem affecting the clubs is the way they are taxed. Clubs are paying upwards of 55% on average on gaming profits. Even if an individual machine is not making a profit, the clubs are still taxed on the coins collected in the drop box. The casinos, by contrast, pay only 15% gaming tax on their handle. At present, the clubs can’t use bill acceptors or run cashless systems. The casinos can. The Singapore Government is currently reviewing the clubs’ operations and taxation, and it’s hoped that a new system proposed for early 2011 will allow the clubs to compete, but most agree that will only happen if the government taxes the clubs on gaming profits, not turnover. If the slot clubs get a break and are taxed on profits, they can fight back, especially if they are allowed to use bill acceptors or cashless operations just like the casinos. Even though they are limited to a maximum 40 machines per venue, they can still stand and fight, and have the opportunity to win back some or all of the ground lost to the casinos. In the meantime, the fall in club business is blamed squarely on the casinos, and not just by the club owners. Some locals see the casinos as outsiders who have come to the market to kill the clubs off. There are more than one million Singaporeans associated with clubs in Singapore, either through membership or regular attendance. As the clubs suffer, so discontent is bred in local hearts regarding the casinos. Tourists versus locals The Singapore government originally heralded the two casinos as away of bringing extra tourism to the city. That reasoning is being questioned now that figures reported in Singapore’s parliament show a million Singaporeans entered the casinos in the first seven months of their operation. This shocked the general public. Possibly reflecting or tapping in to this mood of public unease is a rising tide of negative publicity in the media. This includes not just reports about people being caught committing crimes within the casinos, but also stories about spectacular levels of problem gambling. Perhaps the most notorious example is a report about a local wholesaler of fish who lost S$26 million (US$19.8 million) in just three days and is taking legal action against one of the casinos. It is well known that sections of the Singapore media have been running negative stories about casino gambling ever since the idea of legalisation was first proposed back in 2004. Potentially more troubling for the operators is the way that influential publications such as The Straits Times have recently begun highlighting not just individual incidents but questioning the fundamental issue of whether the IRs represent good value for Singapore. The operators ignore this mood at their peril. The Singapore government may have overruled a vocal opposition to get the casino policy instituted in the first place, but it has shown in the past that it is willing to alter important policies in response to public pressure. That could potentially include measures to control casinos’ perceived ‘exploitation’ of local players. If the casinos don’t police themselves and work on their local image in terms of toning down aggressive targeting of local players, the Singapore government may be forced by popular opinion to act. Once Bus stop—storm over casino shuttle service for locals etc can enter.” Red sky at night The casino operators’ eagerness to tell a good news story for their investors and lenders by publicising ‘telephone number’ revenue figures and profits may have backfired with many Singaporeans. Some are starting to become very suspicious of the companies, questioning whether the effort to attract local players is in some cases disproportionately greater than the effort to attract foreign ones. LVS has said that about one-third of the visitors to its Singapore casino are local. Although Genting has not publicly stated the number of locals visiting RWS, some analysts think the proportion of locals there is greater than at MBS. In early September, Singapore’s Casino Regulatory Authority (CRA) ordered the city-state’s two casino operators to stop providing free buses from residential districts of Singapore to the casinos with immediate effect. When Vivian Balakrishnan, Singapore’s Community Development, Youth and Sports Minister spoke on the issue in the Singapore parliament a few days later, the Not smiling now—Singapore’s community minister, Vivian Balakrishnan