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Monday, August 15, 2011

S'pore casinos showing signs of maturity

15 August 2011
Lynda Hong - LyndaHong@mediacorp.com.sg

SINGAPORE - Singapore's casino industry is showing signs of maturity, with the country's first operator reporting a proportional slide in earnings from gambling.

Genting Singapore, owner of Resorts World Sentosa (RWS), may be looking to non-gaming operations to drive future revenue growth, after one-and-a-half years of above-forecast performance.

"There is a lot of pundits that have the view that the Singapore market is becoming mature, if one can call it that, as it relates to a limited growth to the upside because there is a finite capacity," said Mr Jonathan Galaviz, chief economist at Galaviz & Company. "There is only so much casino gaming space in the integrated resorts where you can have only a limited increase in gaming revenue."

Genting Singapore posted a 17-per-cent slide in second quarter revenue to S$728.7 million, from S$874.4 million a year earlier.

The company noted a lower take from big spending, premium players.

"Win percentage in the premium player market segment for second quarter of 2011 was significantly lower than the theoretical win and that of first quarter of 2011, pulling down both revenue and EBITDA numbers of the Singapore IR," Resorts World integrated resort (IR) said in a statement accompanying its results on Friday.

Analysts say Singapore may be losing out to Macau, the Chinese territory which is now the world's largest gambling centre, in attracting premium gamblers because of restrictions on junket operators who have yet to be licensed.

Junket operators bring in high-rollers at a commission to the casinos.

Macau registered 12 per cent growth in revenues last quarter.

Genting Singapore's second quarter net profit dropped 39 per cent from the same period last year to S$242.9 million.

SIAS research investment analyst Liu Jinshu said the days of sky-high earnings growth from casinos in Singapore are over. "When the integrated resorts first came out, we had high expectations," he told MediaCorp in an interview. "One year down the road, I would say we can no longer expect things like 50 per cent, 100 per cent growth rates."

With little room for expansion of gaming activities, either physically or within the bounds of legislation, Singapore's casino resorts are expected to increase reliance on non-gaming attractions.

"The strategies of the senior management team focusing on the non-gaming pieces are really going to be, I think, where a lot of the positive, upward performance potential remains," said Mr Galaviz, who produced a public policy white paper outlining the tourism benefits of casino gaming legalisation in Singapore.

Analysts at Citibank expect RWS, which has about 60 per cent of the Singapore gaming market, to give up some ground to rival, Marina Bay Sands, in coming quarters.

Citibank says market share between the two IRs should equalise next year.

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