Singapore Casinos: Where the chips are down (Part 2 of 4)

Analysts are most worried over new proposed laws which will cap the VIP segment.

In the first installment of this four-part feature, gaming analysts said that the plateauing of gaming revenue in Singapore isn’t overly surprising. They hold bullish views on the issue as they believe that anemic mass market gaming revenue growth is just a short-term blip. In 2013, analysts expect Singapore's gaming revenue growth to sit in the 0% to 5% range. However it is the new proposed laws that will cap the VIP segment that has analysts most concerned. Here's what they said:

1. Wai Ho Leong, senior regional economist, Barclays

Gaming is but part of the overall visitor experience in Singapore and situation here tends to be more heavily driven by business traffic – the conventioneers, exhibitions, conventions, business visitors as well as leisure tourists. This is unlike other places which are driven by grind gamblers and leisure, which could be more affected by tighter rules on junket operators.

2. Grant Govertsen, principal analyst, Union Gaming Group

Further IMA restrictions will likely have a minimal impact on the market given that the contribution of the existing IMAs is nominal (accounting for a very low single digit percentage of VIP business). However, by not expanding the IMA program, the effect could be to artificially cap the VIP potential of the Singapore market.

3. Joe Poon, associate director of corporate ratings, Standard and Poor's

The Singapore government never intended to promote itself as a gaming hub in the region. The new laws imposed by the Singapore government are designed to ensure gambling does not become a social problem in the country, and he expects this will be a continuous process, which could hamper growth.

We believe these concerns about social problems and potential illegal activities also drove the tight junket operator reviewing process. As a result, we don't currently expect junket operations to have a significant impact on the gaming industry in Singapore.

4. Ciarán Carruthers, president and CEO, Asia Pacific Gaming Consultancy Macau

If the regulatory reins get pulled even tighter, this will undoubtedly make their ability to compete in this space so much more difficult. More and more countries around the region are looking at casinos as a viable form of revenue and job creation, and eyeing the lucrative junket market to bring in significant revenues from high net worth individuals from overseas.

As competition heats up here, and junkets are provided an ever increasing range of options to choose from, it is hard to see anything but hard times ahead for Singapore's junket efforts.

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