SINGAPORE — Two years ago, Singapore launched its first casinos in a bold bet that
it could bolster its economy without attracting social ills, such as organized
crime and gambling addiction, that have plagued other casino capitals.
Today, its two new casinos—Las
Vegas Sands Corp.'s Marina Bay Sands and Genting Singapore PLC's Resorts World
Sentosa—are financial winners, generating about US$6 billion in gross gambling
revenue in 2011. But the social experiment has yielded mixed results,
pressuring authorities to do more to contain gambling ills even as the global
slowdown and rising competition threaten growth in the country's fledgling
casino industry.
To be sure, the feared rise in
organized crime never materialized, and gambling overall in the city-state has
actually declined. But government leaders are concerned about surveys that
indicate more low-income residents are betting larger sums and frequent
gamblers are playing more often, while more people are seeking counseling for
gambling troubles. Anecdotal reports of problem gamblers in the local
media—some of whom have turned to crime to fund their gambling addictions—have
also alarmed people.
In response, the government is
upping the ante. Authorities recently expanded a program that prohibits locals
who are bankrupt or reliant on government aid from going into the casinos, with
about 43,000 people now barred. In July, the government proposed significantly
increasing disciplinary penalties for casino operators that don't follow
Singapore's casino-control laws, which include taxing locals S$100 (US$80) a
day or S$2,000 annually to enter the casinos and tough limits on gamblers'
ability to get credit in them. More steps are in the works, such as limiting
the frequency of casino visits by some local gamblers.
Singapore already had some of the
strictest casino rules in Asia, with restrictions that prohibit casino
advertising targeting locals and limits on the presence of junket operators—the
middlemen who bring high-spending gamblers to the tables, issue credit and
collect on debts in exchange for commissions. They are the linchpin of the
world's largest gambling hub by revenue, Macau, but they also have been linked
to organized crime and have largely been blocked from operating in Singapore so
far.
The results of Singapore's
experiment are being watched closely across the world. Lawmakers in Japan,
backed by gambling interests like U.S. billionaire Sheldon Adelson's Las Vegas
Sands, have stepped up calls for casino legalization to help revitalize the
country's economy. Taiwan and Mongolia have flirted with the idea, as have U.S.
markets like Miami. Wealthy private backers, including Japanese pachinko magnate
Kazuo Okada, are pushing ahead with projects in the Philippines and Vietnam,
with more potentially to come.
It still isn't clear how well
policies like the ones enforced in Singapore work—or whether they can be
sustained in the long run, especially as casino revenue growth there slows and
other countries launch competitors.
"Singapore's regulatory
approach is a good approach in principle [but] the evidence would indicate that
these policies have actually had a relatively minor impact in Singapore," said
Robert Williams, a professor at Canada's University of Lethbridge and
researcher at the Alberta Gambling Research Institute. Others disagree, saying
the rules have helped to prevent trouble.
The data are somewhat
inconclusive. The casinos say visits by citizens and permanent
residents—estimated to account for about 20% to 30% of all visitors—declined in
2011 from the previous year. The overall gambling rate among locals age 18 and
above—which includes any participants in horse-racing, sports betting and
lotteries— fell to 47% in 2011 from 54% in 2008, according to a survey
published by the National Council on Problem Gambling in February.
The crime rate in Singapore fell
5.3% last year from 2010 to a 20-year low, while casino-related crime—mainly
cases of theft, cheating and counterfeiting—has remained stable at less than 2%
of total crime in 2010 and 2011, according to police data.
But more low-income players are
betting large sums while frequent gamblers are playing more often, the latest
NCPG survey found.
"We note from [the NCPG
survey] that problem gambling issues in Singapore are largely contained,"
Singapore's Ministry of Community Development, Youth and Sports said.
"However, we prefer to be proactive" in tackling gambling-related social
problems. "The experience from other jurisdictions tells us that it
usually takes three to five years for the situation to stabilize."
Official data collated from
counseling centers point to rising numbers of people seeking help for gambling
problems. One such center, the National Addictions Management Service, logged
398 cases in the financial year ended March 2011, up from 88 in the year ended
March 2008. Cases at another center, the Tanjong Pagar Family Services Center,
rose to 132 last year, up from 105 in 2010 and 86 in 2009.
Anecdotal examples of problem
gambling have also spread. In December, a local court sentenced an
audio-equipment salesman to six years in jail for defrauding employers and
acquaintances of more than S$1 million to pay off debts and fund his gambling
addiction, which included trips to Marina Bay Sands and lottery outlets,
according to the man's defense counsel, Mervyn Tan.
As part of its recent tightening,
the government proposes to increase maximum disciplinary fines on casinos to as
much as 10% of their gross gambling revenue, which could push fines into the
hundreds of millions of dollars, up from the current cap of S$1 million. Among
those who will be locked out of the casinos are some citizens and permanent
residents who are in arrears on rental payments.
Another issue, albeit more
difficult to measure, is the wider social impact of the casinos, which critics
say have encouraged more conspicuous displays of wealth while failing to help
lift wages for low-income workers.
"The casinos pander to
particular lifestyles of conspicuous consumption, and some of the measures
banning the poor fuels the perception that we're stratifying society on the
basis of wealth—it's worrying, and not something we should be proud of as a
community," said Vincent Wijeysingha, treasurer of the opposition
Singapore Democratic Party.
The government argues that the
casinos—which hire about 22,000 people—have helped citizens' economic
well-being, even though some positions have gone to foreigners.
Singapore's move to tighten
casino regulations hasn't met much resistance from casino operators so far. Las
Vegas Sands' Mr. Adelson said in July that his company isn't concerned by
Singapore's moves and doesn't expect the tighter rules to significantly hurt
its business. "We don't have a problem if [Singapore] wants to put a
limitation on either visitation or the exclusion of very poor people," he
told analysts in an earnings call. "We don't see the future coming out of
poor, unfortunate, very vulnerable people."
But underscoring the pressures
casinos may feel to open their doors to more gamblers, both Marina Bay Sands
and Genting Singapore reported weaker second-quarter earnings, citing declines
in business volumes.
For Singapore, the longer-term
question is whether future governments will be tempted to ease controls if
growth in casino revenue plateaus. Analysts expect Singapore's casino market to
expand at a slower pace in the next few years, with revenue growth likely
slipping into the high single digits amid greater competition from other Asian
markets.
A battleground could be junket
operators—the most potent potential growth booster for now, as Singapore is
legally bound to not add new casinos until March 2017. While experts say
Singapore doesn't intend to let junkets dominate its gambling scene as they do
in Macau, some analysts say authorities may be compelled to license more of
them if revenues wilt. Regulators here have licensed just two small outfits so
far, and are planning tougher rules that could crimp operators' profitability.
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