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Radio
Singapore International, 9 Nov 04
An
Update on Singapore's Plans to Open a Casino
This week in the Singapore Scene, we get an update on Singapore’s
plans to open a casino. Welcome to the program, I’m Howie Lim.
Over the last few months, there has been a lot of discussion on the
pros and cons of opening a casino in Singapore. It now appears that
the Singapore government will be issuing a Request For Proposals sometime
in January 2005. So what exactly will this request include?
Jonathan Galaviz (JG) is a partner with Galaviz Ong and Co which tracks
the global gaming market. He was in Singapore recently as part of
a group of a dozen U.S. companies in the U.S.-ASEAN Business Council
meeting with Singapore government. He explains.
JG: This RFP issued by the government will do the best of its abilities
to address the strategic intent of government in defining the parameters
of both the requirements of a successful proposal and also some of
the intent of addressing issues such as problem gambling that the
government has and once to be addressed in the proposals that they
receive from global casino gaming operators. What is known now is
that the cabinet is pretty coordinated as far as their message which
is one of being cautious, thoughtful, and researching all possible
possibilities and considerations of a casino legalisation proposal.
So what kind of approach is Singapore is taking in considering whether
or not to legalise a casino. Jonathan tells us more.
JG: First of all, the decision to move forward with an RFP is one
decision. The actual decision to move forward with legalisation is
another and this is unlike any other jurisdiction in the world or
in the United States and it’s actually a smart strategy for the Singapore
government to take. Basically the idea of looking at to whether it’s
viable to have a casino gaming property that addresses the strategic
intent of the government before they actually legalise is the best
way to go about it that maximizes the government’s leverage and being
able to achieve the most that they can get in the proposals.
Singapore is basically coming from a ‘how much will it benefit Singapore
to do this’ stand point, which minimizes on the social ills critics
have been harping about. This establishment will not be a stand-alone
casino. Jonathan goes into the mechanics of it.
JG: As part of the overall desire of the Singapore government, they
want to be able to have the ability to attract mass market tourism
visitation and to ensure that Singapore’s position in the regional
market and also greater Asian market is enhanced by the creation of
an integrated entertainment center or what they’re now calling it,
integrated resort. This IR or integrated resort will have the components
of a convention center, a fine dining, hotel rooms, possibly a sports
arena that would compliment venues such as the Esplanande and others
in Singapore. The ability for the casino gaming property to incorporate
a casino floor is a critical component because the casino floor and
the casino gaming activity actually cross subsidizes and cross pollinates
the activities of the other components of the property such as the
convention center and the fine dining.
Given Singapore’s financial position, the gaming industry knows that
Singapore is in no great hurry to legalise a casino. Jonathan expounds
more on this.
One of the things that’s important to understand and I think that
everybody who knows Singapore knows this is that Singapore is a very
wealthy country. There’s always the debate and the discussion about
what the GDP growth of the nation is going to be next year, next month
of even next week! But the fact is is that the financial assets of
the government and of the republic itself and of the people are at
the level to where they’re not in a dire strait to have to legalise
casinos for the purpose of revenue generation which is the case for
most US states which talk about legalisation of casino gaming or even
other countries. Those countries and those states are usually concerned
with generating money so that they can run their government and fund
their government programs. Singapore is not in that position. Singapore
is probably one of the first jurisdictions in the world to look at
it from a very strategic perspective and this is actually a compliment
to the Singapore government, the way that they’re moving forward with
thoughtfulness on this proposal.
The Singapore government desires to ensure that Singapore has a viable
position in the next decade in the regional tourism market and Jonathan
tells us why.
That is important because there are components of Singapore’s economy
that do have a substantial foundation that’s based upon tourism visitation,
companies such as Singapore Airlines, the hotel sector here, and also
the auxiliary industries that support hospitality and travel and tourism.
So there is a sector that needs to be protected and also enhanced
and the casino legalisation proposal is something that would enhance
the strategic position so the differing objectives between US states
and also various countries as compared to what Singapore situation
is very different and therefore you would expect the approach to be
different and in this respect I think the Singapore government is
really taking an effective approach in being able to do two thing.
Number one, to make sure that its strategic concerns are addressed,
number two, maximize the leverage that it has when it negotiates with
casino gaming operators.
Casino gaming operators are going to position themselves as companies
who have the ability to create auxiliary entertainment options in
addition to what a casino provides.
So the casino is kind of a hub, if you will and the other entertainment
options are going to be spokes. So we’re going to have the casino
gaming floor anchoring a casino property or properties with the other
amenities surrounding it so to speak. The Las Vegas based operators,
while they get a substantial amount of non-gaming revenue, it’s about
50-50 mix between casino gaming revenue and non-gaming revenue, which
is like food and entertainment options. The fact is that majority
of their profits come from the casino gaming floor and that’s where
you get that cross subsidy and cross-pollination, the financial benefits
of having a casino floor integrated within the property. The casino
operators are going to be really focusing on addressing the strategic
intent of the Singapore government which is ensuring that there’s
an enhancement to the strategic position that Singapore has and maintains
and possibly enhances in the next decade as it competes with places
such as Thailand.
The social ills and negative impacts of gambling have been debated
extensively. Casino gaming operators will do well to address these
issues for a fair chance at ‘winning’ at this game. Jonathan agrees.
I think that the smart casino gaming operator and the ones that really
want to win will dedicate a substantial amount of their proposal to
address the problem gambling issue and the negative impacts that casino
gambling could potentially provide Singapore. In the same respect,
it’s also important to note that gambling is already legal in Singapore
and so it’s important to look at it from the perspective that chances
are there are already problem gamblers in Singapore right now and
the question is how are those problem gamblers being taken care of
and what strategies are in place right now to address it. When a casino
gaming property comes to a jurisdiction either by way of voluntary
and or governmental regulation, the casino gaming property has to
address problem gambling and actively address it in a structured manner.
A casino gaming property coming to Singapore would be able to effectively
address the problem gambling issue and those that will ultimately
successful, in this exercise will be that ones that actively make
the best efforts to incorporate corporate strategies and partnership
with the government to address the problem gambling and social negative
impact.
Every year, Singaporeans spend close to US$720 million in neighboring
casinos and cruise casinos. Is the Singapore government looking to
stop this ‘leakage’? A question I put to Jonathan Galaviz, gaming
analyst.
The fact is there are two angles. There’s the attracting external
tourism visitations to Singapore and then there’s the second perspective
which is Singapore wanting to maintain or not allow economic leakage
of casino gaming expenditures and jurisdictions outside of Singapore
ie the cruise ships or other countries so essentially the government
can kill two birds with one stone. It can, by legalizing casino gaming
in the proper manner and thoughtful manner that they want to, address
the economic leakage issue that occurs when Singaporeans go overseas
and or within the region to gamble at jurisdictions that are either
legal or illegal and secondly, they’re also able to address the strategic
issue or idea and concern of being able to attract and enhance external
visitors to Singapore. In that respect, the legalisation of casino
gaming is a important component to ensuring Singaporeans remain at
home rather than going abroad to expend their discretionary income.
The Singapore government has made it very clear that only with the
right proposal will the legalization of a casino be seriously considered.
Jonathan tells us what the RIGHT proposal might look like.
The right proposal is going to be one that is basically ultimately
one that addresses every strategic intent and every desire that’s
stated by the Singapore government. Some of the top three are going
to be problem gambling and the social costs involved, and the proposal
that effectively addresses that the best has the high likelihood of
winning. Number two it’s going to be the casino gaming property’s
ability to attract external customers. Number three is the ability
for that casino gaming operator to ensure that Singapore is the hub
of operations within south east Asia or even Asia should that casino
gaming operator win a license here. So that would also include administrative
positions that would include a regional vice president or corporate
headquarters in Singapore.
That was Jonathan Galaviz, a casino gaming analyst from Galaviz Ong
and Co.
And so it remains to be seen whether our fair island will see the
likes of the MGM Mirage or the Bellagio, landmark hotel casinos of
the Las Vegas strip on her shores. Anyone care to bet on that? Till
next week, this is Howie Lim.
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