Singapore Casino Revenue To Continue Expected Decline In 2016
After Macau and Las Vegas, Singapore is the third biggest gambling market in the world based on gross gaming revenue. The casino industry in Macau has suffered 19 consecutive months of decline due to the anti-corruption crackdown imposed by Beijing and Singapore’s casino industry has also witnessed a steady decline.
Singapore’s gross gaming revenue in 2015 stood at $4.8 billion which was a decline of over 10 percent when compared to revenue generated in 2014. Gaming analysts predict a similar trend in 2016 and have cautioned Singapore’s two flagship casinos Resorts World Sentosa and Marina Bay Sands to be prepared for the decline.
The two mega-casino resorts draw millions of visitors every year as they are promoted as two of the biggest tourist attractions in Singapore. However gaming analysts have stated that during the last eight years both resorts have attracted a high number of visitors due to the fact that they have been relatively new in the market and still carry the ‘must-see’ brand in the market. Analysts warn that in a few years the ‘must-see’ novelty will wear off and both the resorts will struggle to attract the same number of visitors.
Both resorts secured their gambling licenses in 2007 and will need to renew their licenses in 2017 but according to predictions made by Fitch Ratings based on their research of the Malaysia and Singapore casino industries, the Singaporean government will most likely decline their request for renewal. The government is concerned that the casino industry is having a negative impact on the country and will increase the number of issues related to problem gambling.
Singapore has extremely strict gambling laws which make it very difficult for casino operators to function and make a steady profit. If the government were to issue new licenses and allow other casino operators to enter the market, it will most likely have to introduce more laws to ensure the protection and well-being of its citizens but that could have a serious impact on the revenue generation possibilities of these new casinos.
Analysts from Morgan Stanley also stated that due to the continued appreciation of the Sing dollar against other Asian currencies, tourists are spending less money at these casino resorts and this will be another reason why casino spending drops in 2016. In a statement, analysts from Morgan Stanley said
We believe deteriorating fundamentals in Singapore represent an underappreciated risk. We have cut our Singapore estimates to reflect a weaker economy and the meaningful Singapore dollar strengthening affecting foreign demand.
