The Singapore government is “unlikely” to grant new licences to set up new casinos post-2017, said an outlook report on the Singapore and Malaysia casino markets from Fitch Ratings Inc, carrying Sunday’s date.
The reasons are the “potentially higher frequency of problem gaming with the local population, and the muted outlook for the inbound tourism sector in Singapore,” stated the report from Singapore-based analysts Nandini Vijayaraghavan and Hasira De Silva.
The city-state in 2007 issued a casino licence respectively to Las Vegas Sands Corp and to Genting Singapore Plc to operate one gaming resort each, namely Marina Bay Sands (MBS) and Resorts World Sentosa. The exclusivity period for those licences expires in 2017.
Lionel Yeo, chief executive of Singapore Tourism Board, was indirectly quoted in a Bloomberg News story dated December 1 as indicating the government was keeping all options on the table regarding the casino licence exclusivity question, but did not elaborate on his remarks.
Lee Yi Shyan, Senior Minister of State for Trade and Industry, said in Singapore’s parliament on May 11 that the city-state had “no plans” currently to offer additional casino licences when the moratorium on such licences expires.
The Straits Times newspaper also quoted Mr Lee saying that the two integrated resorts had contributed between 1.5 percent and 2 percent to Singapore’s gross domestic product, and between them created more than 20,000 jobs.
In recent years Singapore has nonetheless taken a series of measures aimed at mitigating the effects of any problem gambling among locals. It has targeted online gambling as well as offline kinds.
Singapore imposes a casino entry levy on its own citizens and permanent residents if they wish to enter the two casino resorts. The entry fee is SGD100 (US$71) per 24-hour period, or SGD2,000 for a one-year pass.
Regarding the issue of demand for tourism in Singapore, as raised by Fitch, Bloomberg noted earlier this month – quoting government data – that in the first half of this year Singapore’s tourism receipts fell 12 percent from a year earlier to SGD10.5 billion, while the average occupancy rate at luxury hotels slipped almost 4 percent.
Fitch said – in its outlook report for Singapore and Malaysia casino gaming in 2016 – it expected Singapore’s casino gross gaming revenue (GGR) to “stagnate” next year, after declining by about 10 percent to US$4.8 billion this year.
“The anti-corruption crackdown in China, [the] weaker Indonesian rupiah and softer regional economic growth have caused earnings to plateau,” noted the Fitch analysts, adding “Marina Bay Sands has increased its market share to 62 percent in the third quarter 2015, from 49 percent in the first quarter 2014… driven by: its central location (close to financial district); connection to the [Singapore] mass transit rail system; and brand synonymous with premium casinos.”
Fitch added that the credit outlook for what it described as the “highly regulated” integrated gaming resorts in Singapore and Malaysia is stable despite “challenging” macroeconomic conditions.
“The three issuers in these countries – Genting Berhad (Genting, A-/Stable), Genting Singapore Plc (GENS, A-/Stable) and Marina Bay Sands Pte Ltd (MBS, BBB-/Stable) – are established companies that continue to generate robust operating cash flows,” said the ratings house.
Malaysia’s sole casino resort, Resorts World Genting, operated by Genting Bhd unit Genting Malaysia Bhd, has been undergoing a major refurbishment programme.
“Fitch’s stable outlook for the Malaysian gaming market is underpinned by the market’s domestic and mass-market focus, which provides defensive qualities,” noted the analysts, adding that the country’s inbound tourist arrivals declined 9.4 percent to just under 12.6 million arrivals in the first half of 2015.
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“We expect Las Vegas Sands to not have any material change in strategy. The focus remains developing Macau and Singapore”
Vitaly Umansky, Kelsey Zhu and Tianjiao Yu
Analysts at brokerage Sanford C. Bernstein