As I was reading through some of the stories on Wynn Resorts earlier, I came upon a stunning item on CNBC. Singapore - which only has TWO resorts that have recently opened, already generated $5 Billion+ in revenue in 2010. RBS is forecasting 2011 will show a 25% growth rate to $6.4 Billion, which would have Singapore passing Las Vegas ($6.2B). I was floored by that. Just another example of how the globe is shifting on its axle to the East.
Also interesting was that 60% of the business is from those who live in Singapore - I thought it would be a lot more tourist heavy (Indonesia, India, China etc). To put into perspective how astounding that is, Singapore has a population of 5 million (versus 310M in US) - yet that population accounts for 60% of spending in casinos that generated 80% of Las Vegas.
- Twelve months into business and Singapore’s first two casino resorts Marina Bay Sands and Resorts World Sentosa have already won the jackpot for the island country. The two generated gross gaming revenue of $5.1 billion dollars in 2010.
- This year Royal Bank of Scotland forecasts revenue is set to rise by 25 percent to $6.4 billion, placing Singapore on track to overtake the Las Vegas Strip, which is forecast to earn $6.2 billion. That would make the island nation, the world's second biggest gaming center behind Macau.
- Analysts say the voracious appetite for gambling among Asians and their growing wealth will drive momentum in Singapore's casino sector for years to come. This is a stark contrast from the Strip, which has seen a slump in revenues for four consecutive months.
- The 2,561-room luxury hotel Marina Bay Sands, which has a 200-meter-tall, boat-shaped SkyPark and a lavish casino equipped with 500 gaming tables, attracted more than 11 million visitors over the past year — 885,000 guests walked through its doors over just four days of the Chinese New Year holiday in February.
- Marina Bay Sands reported net revenue of $560 million in the three months to December, $457 million of this amount was generated by the casino alone. “Our recent financial results show that Marina Bay Sands is on track on all fronts, even surpassing our original expectations,” commented Mr. Leven, President and COO of parent company Las Vegas Sands.
- Its rival, Resorts World Sentosa, has seen measurable success welcoming 15 million visitors last year. The family focused casino-resort generated revenue of $623 million in the fourth quarter, over 80 percent came from gaming alone.
- Gaming analyst Jonathan Galaviz of Galaviz & Company believes that Singapore’s reputation as a safe and corruption-free global city has been key in boosting its competitive advantage in Asia’s casino industry.
- The blazing performance of the Marina Bay Sands and Resorts World Sentosa is also in large part due to the patronage of local Singaporeans, who made up about 60 percent of the casino customers last year, despite a S$100 ($79) entrance fee imposed by the government to act as a deterrent.
- While the large domestic customer base is seen as positive for the casinos in the short-term, it could pose a threat to the growth potential of the sector in the long-term as the novelty surrounding the gaming complexes wear off. Galaviz says over time, the integrated resorts’ non-casino offerings, for example, Resorts World Sentosa’s Universal Studios theme park and Marina Bay Sand’s Grand Theater will become more important.
- Another risk to the sector, according to Aaron Fischer of CLSA, could be a possible intervention by the government to limit gambling by locals. For example, last September the government along with the Casino Regulatory Authority (CRA) asked the integrated resorts to discontinue the free shuttle bus services between the city’s suburbs and its casinos.
- ....any further delays in the approval of junket licenses by the CRA could also hamper the growth of the overall market. There has been speculation junkets may be prohibited from operating in Singapore by the enforcement of strict licensing requirements aimed at preventing money laundering. The VIP gaming market depends largely on the presence of junket operators, a third party that offers credit and brings high roller gamblers to a casino in return for commission. In the absence of junkets, the casinos' gaming revenues could be constrained as they are unable to hand out infinite credit.
- However, both Fischer and Hung believe that junkets will eventually get licensed given the very significant business opportunity. “We estimate Singapore gaming revenues of $8.1 billion next year — we see up to 50 percent upside to these estimates should a number of high quality junkets operate in Singapore,” Fischer concluded.