Inside Asian Gaming

INSIDE ASIAN GAMING | August 2011 12 Market Outlook have been limited by regulation as to what they can do to increase turnover. Any promotion that encourages turnover is actually illegal. This has created yet another imbalance between the club business model and the casino one. Comeback It has only been three months since the turnover tax system was introduced for the clubs. And yet, even with the modest help the turnover tax system has provided, it seems the clubs are fighting back. They may even be regaining some or much of the ground they lost during 2010. Some have been slow to adopt the necessary business practices to take full advantage of the new regulations, but those that have are pleasantly surprised at the results to date. Those introducing 50-line, five-cent and two-cent machines, and TITO, bill acceptors and cashless operations have gained the most. The effect of removing the 200 credit lock-up, combined with the excitement of the lower denomination 50-line games seems to have had a drastic effect in engaging club players. Some clubs report that players lost to the casinos are now returning. It all points to the idea that local players really do love their slot clubs, and are happy to use them when the clubs are allowed to offer competitive products. The Singapore casinos went after local slot players early on. Many of the early promotional activities were specifically designed to court them. They included free buses from the Singapore ‘heartland’ districts (a euphemism for low-income areas). Booths were also set up at major shopping centres by the casinos to sign up members for their player loyalty clubs. These types of promotions have since been banned by the Casino Regulatory Authority. The CRA and the Singapore government were not impressed by the casinos’ attempts to recruit lower income locals. Going for such ‘low hanging fruit,’ to use modern business jargon, made plenty of commercial sense to the operators after they had spent billions of dollars to build their honey traps, but wasn’t good politics for Singapore’s lawmakers. They had sold the casino policy to an at times sceptical public on the basis of building up the number of upmarket overseas tourists visiting Singapore. As it turned out, the CRA was able to make use of laws limiting the promotion of gambling in Singapore to curb the heartland marketing drive. Does the fact the clubs seem to be fighting back suggest a weakening in the appeal of the two casino resorts as far as mass- market electronic gaming customers are concerned? It’s probably too early to say for sure. Things can change quickly in modern gaming. It was only 18 months ago that the clubs had 100% of the gaming machine market in Singapore. Then with the arrival of the integrated resorts the number of machines in the market quadrupled and the clubs’ share of the expanded market dipped below 30%. And yet, Singapore still has the capacity to absorb many, many more machines into the market, compared to other markets of similar demographics. It’s probably fair to assume that won’t happen any time soon. Gambling in general is still very much of a local ‘hot potato’. The public debate since the casinos opened and the government’s desire for the casinos not to focus on local players will probably restrict the growth of product supply. Having said that, the government had a lot of political capital staked on making the casinos a commercial success. Now the IRs have exceeded the expectations of more bearish commentators, the politicians at least have some wiggle room to make things fairer for the slot clubs in future, should they wish to use it. And the Singapore clubs aren’t standing still. They are learning all the time new ways to compete with the casino big boys. The clubs may have one arm tied behind their collective back in terms of regulations, but with the other arm they’re jabbing away for all they’re worth and scoring points each round. Whether they can land a knockout blow against the casinos in the fight for local slot players will only become clear many rounds from now. The author, David Kinsman, is a Singapore-based gaming professional who has worked at CEO level in the land-based and online industries. Since early 2008, he served as CEO of Weike Gaming Technologies and recently stood down from that role but continues as an independent director of Weike, Singapore’s only locally based gaming machine and gaming systems manufacturer. He has extensive experience in the Singapore market, having worked with clubs in Singapore providing gaming machines and systems for the past two decades. Turnover tax Staff wages, general overheads and profit Promotions & jackpots Return to player (RTP) How the Singapore slot clubs’ turnover is split 1.5% 6% 9.5% 82.5% The Singapore casinos went after local slot players early on.Many of the early promotional activities were specifically designed to court them.They included free buses from the Singapore ‘heartland’ districts (a euphemism for low-income areas).