A weakened Asian junket industry could mean increased competition for premium-mass players by Singapore casinos. The city-state is home to two integrated resorts, Marina Bay Sands (MBS) and Resorts World Sentosa (RWS).
A January 18 note from Maybank IB Research analyst Samuel Yin Shao Yang said Singapore IRs will battle for VIP players with regional competitors in Macau, the Philippines and Cambodia. Singapore has banned junkets since the start of the industry there, forcing the two casinos to develop their own marketing departments.
“We fear that the IRs in Macau, Philippines and Cambodia will target the premium mass gamblers that frequently gamble in Singapore,” Yin wrote.
“These IRs will have to fill the large gap left by the formerly junkets-driven VIP market. As it is, the Macanese IRs are already duking it out to attract Chinese premium mass gamblers and will target Southeast Asian premium mass gamblers who frequent Singaporean IRs when borders reopen. We have heard the same from the Philippine and Cambodian IRs.”
Another negative for Singapore operators is a looming tax increase, from 15 percent to 18 percent for the mass market segment.
“The gaming tax and GST rate hikes will work against RWS (and MBS),” Yin said. “IRs in the Philippines and Cambodia which have a similar, if not lower, tax regime can offer higher rebate rates to Southeast Asian premium mass gamblers who frequent Singaporean IRs to attract them.
“IRs in Macau may not be able to do the same due to their much higher tax regime. Yet, we gather that they can offer superior accommodation. We gather that the most intense competition will come from Cambodia’s NagaWorld due to its low tax regime and familiarity to Southeast Asian, mainly Malaysian, premium mass gamblers. Even before the COVID-19 pandemic struck, Genting Singapore did mention that competition for premium mass gamblers from Cambodia, ostensibly NagaWorld, is intense.”
On a positive note, reported Asia Gaming Brief, Singapore’s VIP market should not be affected by China’s crackdown on cross-border gambling. Its regular VIP players have “substantial ties to Singapore and vastly different money channels than those that facilitated Macau’s junket industry,” the news outlet observed.
As a result, “we do not believe that the IRs in Macau, Philippines and Cambodia will target the VIPs that frequently gamble in Singapore successfully,” Yin said.
Even so, Maybank trimmed Genting Singapore’s earnings estimates by 72 percent in 2022 and 54 percent in 2023, in part due to the suspension of the land vaccinated travel lanes with Malaysia. “Essentially, we expect Genting Singapore earnings to remain uninspiring for another year, making it three years of pedestrian earnings,” Yin said.
