SINGAPORE - On announcing the controversial decision to build two huge new
casinos just over five years ago, Prime Minister Lee Hsien Loong said, "We seek
to be a global city, attracting talent from around the world, lively, vibrant,
and fun to live and work in. We want Singapore to have the X-factor - that buzz
that you get in London, Paris or New York."
On Tuesday, the US$5.5 billion Marina Bay Sands (MBS), the costliest casino
resort ever built, debuted on the edge of Singapore's financial center and has
already become a Lion City icon. Designed by renowned architect Moshe Safdie,
the three tapering hotel towers are connected 57 stories overhead by a 1.2
hectare SkyPark which is curved at the front like a ship's prow. MBS was
developed by Las Vegas Sands (LVS), the US casino
giant that, through its Sands China subsidiary, also owns the Venetian Macao
and Sands Macao.
The MBS complex includes 2,560 hotel rooms, a 121,000 square meter convention
center that can accommodate 45,000 delegates, a resident production of The Lion
King, a lotus shaped museum, and a 74,400 square meter shopping center
that blows away Singapore rivals in terms of offerings and its bright, airy
design. And there's also a 15,000 square meter casino whose main gaming floor
may be the most elegant on earth.
'No more nanny state'
"We're closing the gap with Hong Kong and others in terms of a cosmopolitan
city," Singapore's leading nightclub impresario, Saint James Holdings chief
executive officer Dennis Foo, said. "No more nanny state."
The opening of MBS - Singapore categorizes it as an integrated resort (IR) -
comes two months after the debut of the city-state's first casino IR, Resorts
World Sentosa, a US$4.6 billion complex featuring Southeast Asia's first
Universal Studios theme park, four hotels, and its own casino. Both IRs are
still in the soft opening phase.
MBS plans a grand opening in late June, but the museum and theater won't come
on line until later with its final pieces - a pair of crystal pavilions that will appear
to float in Marina Bay - expected early next year. Resorts World still has
two hotels to add, plus what's being billed as the world's largest aquarium, a
multimedia maritime museum, with construction possibly extending into 2012.
Despite jackhammers and cranes at both IRs, thousands of visitors are steaming
in daily, mainly to the casinos, the most complete facilities so far. While
some visitors simply come to gawk and cadge a free bottle of water, most have
come to play. The racket inside the casinos isn't construction, but the humming
of slot machines and shouting of excited bettors.
Not dead yet?
Nothing builds a buzz like money, especially really big money, not just to
stack at the betting tables but to patronize the who's who of luxury brands and
celebrity chefs the IRs, especially MBS, are introducing. Yet Singapore has
been oddly reluctant to welcome high rollers to play at its casinos.
The government has stringent rules against junket agents that are vital to the
VIP premium player market for Asian casinos. So perhaps the nanny state isn't
quite dead yet. For junket agents, obtaining a license in Singapore requires
extensive financial disclosure as part of a full background check.
Operationally, junket agents need to store full records in Singapore and
disclose benefits given to their customers. So far few junket operators have
shown interest.
Perhaps the biggest crimp on premium business is the advance reporting
requirement. Casinos must report the arrival of junket customers three hours
before they enter Singapore. Premium players generally crave privacy, hoping to
avoid questions about how much money they have, where it came from and whether
taxes were paid on it.
Junket agents provide services to premium players and deliver them to casinos.
Players often rely on the junket agents for credit. Many countries, including
mainland China, limit the amount of money that people can take out of the
country for any purpose. Junket representatives lend the VIP money to play at
the casinos and the player can pay it back after returning home. Gambling debts
are not recognized under the law in many jurisdictions, including mainland
China, so junket agents are often reputed to have criminal connections to help
them collect debts. Singapore doesn't want those criminal elements gaining a
foothold within its borders.
But the city-state's rules on junkets run counter to its tax regime. The Lion
City taxes premium play at 12%, compared with 22% for mass market gaming
revenue, and 39% across the board in Macau. Singapore's government appears to
be working at cross purposes, encouraging VIPs with one hand while waving them
away with the other. That stance is particularly bewildering because Singapore
wants to be known as the Switzerland of Asia, a safe haven for wealth, and
hasn't been fussy in the past about accepting funds from foreign businesspeople
and government officials with less than perfect pedigrees.
Premium is primary
In Macau, premium-player baccarat accounts for about two-thirds of total gaming
revenue, which reached a record US$14.9 billion last year. Since Singapore's
overall gaming market is estimated at between one-quarter and one-third of
Macau's, VIP restrictions risk costing Singapore casinos at least US$2 billion
in gaming revenue. With a combined investment in excess of US$10 billion, the
IRs will need high rollers to survive, as well as to create a buzz.
LVS chairman Sheldon Adelson downplays the lack of junket operators. "We are
offering clients credit," he said at Tuesday's MBS opening. LVS president
Michael Leven added: "We intend to run this business without junket operators
as we do in Las Vegas. Assuming our process works, it will be more profitable."
William Eadington, director of the University of Nevada Reno's Institute for
the Study of Gambling and Commercial Gaming, speculated that high level
negotiations are underway between casino operators and government officials to
find ways to ease the junket restrictions without admitting criminals or other
unsavory elements.
''On the other side of the coin: Is there a VIP market in Asia that isn't
laundering money, trying to hide illegal funds, or evading taxes?" Eadington
asked.
Without high rollers, the partially completed IRs are reliant on mass market
players who are often bused in across the border from Malaysia. "There isn't
any X-factor or buzz that can be created under such a market situation," said a
veteran casino executive in Singapore, requesting anonymity. Citing the US
resort dominated by elderly day trippers feeding their pension checks into slot
machines, he adds, "It's just another Atlantic City in the making."
London, Paris, New York... Atlantic City? Not exactly what Lee Hsien Loong had
in mind.
Macau Business magazine special correspondent and former broadcast news producer Muhammad
Cohen told America’s story to the world as a US diplomat and is author
of
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