Lately, the rating agency Fitch Ratings reported that gaming revenues will likely stay flat in 2017. According to the company, the VIP segment remains weak, and they expect a US$4 billion revenue in Singapore.
Fitch believes that the country’s two casinos will face significant competition from the Philippines, especially since Okada Manila opened its doors in February 2017, and Macau, the biggest gaming territory in the area. Back in December 2015, the rating agency said that the outlook for the local casino gaming sector was stable, regardless of the slowing economic growth and fewer tourist arrivals. According to the agency report the anti-corruption crackdown in China, the weaker Indonesian rupiah, and softer regional economic growth have caused earnings to plateau
Whilst in 2015 they didn’t predict where the nation’s Government would grant any more licenses to build new casinos, this time they stated that there’s a risk, even if it’s low, that Singapore will give away more gaming licenses, making the industry even more competitive.
Singapore’s casino market is currently a duopoly between Marina Bay Sands resort – developed and run by Las Vegas Sands Corp – and Resorts World Sentosa, built and promoted by Genting Singapore Plc. In its latest report, Fitch said: “Gaming revenues continued a downward trajectory in 2016 largely due to a steep contraction in the VIP segment, despite a 12.5 percent gain in Chinese visitors (the biggest source of VIP revenue) in first-half 2016.”
The rating house noted: “Most revenue comes from foreigners, as residents are required to pay an SGD100 [US$71] entrance fee [for 24-hour access] and marketing to locals is heavily restricted.”
According to Fitch, “Locals are more drawn to state-owned lottery games: Singapore Pools; which also operates sports betting. There are also gambling cruises and small-scale slot parlors.” Fitch noted that the current exclusive rights of the two Singapore operators are due to end in 2017, after which new permits can be awarded.
The two resorts have 30-year concession agreements: due to end in, respectively, 2036 for Marina Bay Sands and 2037 for Resorts World Sentosa, added the rating house.
U.S.-based Las Vegas Sands Corp reported in its fourth-quarter group earnings on January 25 that adjusted property earning before interest, taxation, depreciation, and amortization (EBITDA) at Marina Bay Sands rose 8 percent year-on-year, while net revenue rose 2.8 percent to US$723 million.
The firm’s chairman Sheldon Adelson said during the group’s quarterly earnings call that it hoped to sell a 49-percent stake in the shopping mall at Marina Bay Sands for up to US$3.5 billion.
In Macau, Fitch said it expects “mid-to-high single-digit growth” in gaming revenues for 2017. Macau’s accumulated casino gross gaming revenue (GGR) for the full-yof ear of 2016 was MOP223.21 billion (US$27.93 billion), down 3.3 percent compared to the tally for 2015, according to official data.
Another risk to Singapore casinos, according to Fitch, includes the possibility of higher gaming taxes; a limited ability to expand physically; greater restrictions on Singapore residents’ participation; and a high reliance on a concentrated pool of high-rollers.
On a positive note, Fitch cited Singapore’s “low” gaming tax rate, a “duopoly structure at least through 2017”, and a central location in South-east Asia with well-developed transport links.