China crackdown hurts Singapore VIP business

China’s anti corruption drive will cause a sharp contraction in Singapore casinos’ VIP revenue this year, while longer term the island is facing challenges from increasing regional competition and tight regulation, ratings agency Fitch says.

Growth in revenue has stalled and is likely to contract slightly in 2014, before recovering in 2015, it said. VIPs, mostly Chinese, account for about half of gaming revenue at Marina Bay Sands and Resorts World Sentosa and revenue is unlikely to pick up until the latter part of next year.

“However, the ability of Singapore's gaming industry to tap into a Chinese recovery and the broader growth will be challenged in the longer term, especially as it faces increased regional competition from new casinos in the Philippines, Macau and, potentially, Japan,” the agency said in a note.

It said the casino industry in Singapore also faces regulatory issues, with political momentum unlikely to shift towards greater liberalization, especially given the tone of recent debates.

Singapore recently banned online gambling, with some of the most draconian legislation seen so far.

Fitch says it’s unlikely the government will consider issuing more gaming licenses once the current duopoly expires in 2017, though it may revisit the gaming tax, which is currently locked in until at least 2022.

 

Latest Intelligence

Latest issue

PATA CEO sees slow recovery, but optimism for future

AGB Podcasts