Little chance of a third license
Ongoing weakness in VIP play will mean “roughly flat” revenues in Singapore for this year, says Fitch Ratings Inc. The ratings agency expects the city-state’s two casino resorts to generate US$4 billion in 2017.
“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,” Fitch said in an investor note. “Most revenue comes from foreigners, as local residents are required to pay a SGD100 (US$71) entrance fee for 24-hour access and marketing to locals is heavily restricted.”
Singapore has two integrated resorts, Las Vegas Sands Corp.’s Marina Bay Sands and Genting Singapore’s Resorts World Sentosa. According to a report in GGRAsia, Fitch believes the jurisdiction will feel competitive pressure from others in the Asia-Pacific region, including Macau and the Philippines.
Marina Bay Sands and Sentosa each have 30-year concession agreements that will expire in 2036 and 2037, respectively. “We think the probability of the Singapore government awarding additional gaming licenses to be low, but acknowledge that it is a risk,” the note added.
Fitch cited other risks, including possible higher gaming taxes in 2022; a limited ability to expand physically; greater restrictions on Singapore gamblers; and a high reliance on high rollers.
