The skyline of Singapore is dominated by the sight of one iconic building, one which has featured in countless advertising campaigns, movies, tourist photos and TV shows: Marina Bay Sands. The three towers that hold aloft the boat dominate the mental images one conjures when thinking of the Asian city. However, the building is more than an unofficial symbol for the country itself; it is part of the only two places in the nation where people can go to gamble.
Singapore operates a duopoly system; only two licences are approved by the regulator to allow people to gamble, the aforementioned Marina Bay Sands and Resorts World Sentosa – situated on a beautiful island retreat on the southern tip of the island nation. For a long time, Singapore has been a haven for international banking firms, financial institutions and the richest travellers in the world. Yet, in all that time, its gambling hub wasn’t a significant part of the map. Despite all that it can boast as a nation, Singapore was stricken from the minds of gamblers as a destination because of the pull of Macau.
The mighty Chinese gambling hub was king, undisputed, respected, saluted and seen for the wonder it was. VIP customers flocked to the province in droves to empty cash reserves onto gambling tables before flying home – often via Singapore.
Then, Covid-19 happened. And the world went into lockdown and the bedroom walls became the new office, cinema, restaurant and casino. Macau – as with almost everywhere else – became a mausoleum. Empty casinos and amenities were left bereft of customers while vaccine experts pushed themselves to deliver the work of five years in nine months. But the promise of a return to normality meant the waiting game would surely bear fruit.
So, everybody waited… and waited.
Then, as the light of vaccines began to embrace the dawn of a new day, Macau realised something. After eighteen months of needles in arms, the Chinese Government was not following the policy adopted by much of the world in relation to Covid – it wasn’t allowing people to live with the virus. No, it was still insisting on a zero-Covid policy. As Singapore opened its (jabbed) arms to the cure and to international travellers once more, Macau looked on and saw its casino customers no longer boarding the connecting flights from Changi Airport to Macau; instead, people were staying in Singapore and discovering what gambling delights the financial hub had to offer.
As lockdown after lockdown broke the back of the Chinese gambling hub, Singapore took the business it valued the most, precious VIPs that had accounted for so much of Macau's income. Macau was forced to watch as the money simply halted its pilgrimage to China – and Singapore, with its Covid acceptance policy, welcomed the wealthy.
RECENT RECOVERY AND INVESTMENT
The quick recovery of the VIP market in Singapore was commented on during the Las Vegas Sands Q2 results call – in which Carlo Santarelli, a Deutsche Bank Analyst, asked CEO Rob Goldstein about the ‘75% revenue recovery rate compared to 2018/19 levels, the curtailment of the Chinese market’ and the ‘stability of the VIP rolling chip volume in the market’.
Goldstein was bullish in his response, saying: “I think there’s room to run. I think there’s room in there. I mean, we’re putting $1bn into that product. I’ll be very blunt about it. Let’s be clear that Singapore is more desirable than ever as a destination. It’s growing in appeal to a lot of people for a lot of reasons. We referenced the airlift. You referenced China, you’re absolutely right.
“Obviously, Macau is not operating at this point. But I think this Singapore business is going to continue to grow because of the region, the city-state of Singapore is very desirable, and more and more people are going to come to us.” The comments made by the Sands CEO reinforce the mindset that has crept into the Singapore gambling market; Macau is out of the picture right now, and the opportunity for Sands and Resort World Sentosa presented itself as a result of the pandemic. Sands, after all, is a reliable source – being the biggest gambling company in the world by market capitalisation.
Had Covid never entered the vocabulary of humanity – perhaps the status quo in the Asian market would have been maintained. But as Albert Einstein once said: “In the midst of every crisis lies great opportunity.” A Covid-less world feels like a distant memory now, and from the fog of such global suffering, countless opportunities have been presented. Singapore’s gambling industry has taken notice of the troubles of its dominant competitors and pounced, using the appeal of the wider region to keep VIP customers within the walls of its two finest casinos.
However, the Singapore market has one great detractor which prevents it from becoming the only Asian VIP gambling hub outright; it is restricted by the term that some in the country are trying to fix to take full advantage of the collapse of Macau. That term is duopoly. Singapore currently only allows two casino licences to operate in the country – which drives huge revenues in Marina Bay Sands and Resort World Sentosa but limits the market in the country.
But, according to Lau Kok Keng, Head of Intellectual Property, Sports & Gaming for Rajah & Tann, that is not about to change. When he spoke exclusively to Gambling Insider recently, Lau commented on the happy status quo of the duopoly in Singapore: “The extension of the duopoly was granted in April 2019 in return for investments by the two integrated resorts in non-gaming facilities and tourist attractions; including MICE (meetings, incentives, conferences & exhibitions) facilities, a new luxury hotel accommodation and theme park expansion, amounting to a total of SPD$9bn (US$6.31bn). In line with the increase in non-gaming facilities, the two integrated resorts were also authorised to expand their respective gaming areas and increase the number of gaming machines in their casinos.”
The SPD$9bn the two current casinos have invested into wider Singaporean society indicates that evidently neither wants more competition in the market. Quite the opposite; both want to retain it exclusively. This is a point Lau also alluded to in his comments to Gambling Insider: “The initial 10-year duopoly of the two integrated resorts in Singapore – Marina Bay Sands and Resorts World Sentosa – has been extended until 31 December 2030. During the duopoly period, the Casino Regulatory Authority must ensure there are not more than two casino licences in force in Singapore and that only one casino shall operate under each of the two licences. The Singapore Government has also clarified that no casinos other than the existing ones will be introduced during the duopoly period.” The significant contribution both casinos made to ensure the country retained a duopoly shows the importance both place on keeping gambling within the pair’s express control. This, too, serves as an indicator of how the country wants to present itself as a
destination in Asia.
“In reality, Singapore was never likely to be adding any new casinos to the existing two licensed integrated resorts in the foreseeable future anyway," Lau surmised, as he rounded out his comments on Singapore. The commitment of Sands and Resorts World, then, to investing SPD$9bn into building more non-gaming facilities and tourist attractions here over the next few years would be viewed as a very favourable outcome for Singapore; as it aims to position itself as a leading business and tourist destination in Asia post-pandemic.”
The evident focus on the VIP market and the wider attraction of the Singapore cityscape will always see the country have a market to rely on – even if the current duopoly stays in place for decades to come – as the current operators clearly wish it to. That is because if Singapore does one thing well, it is luxury. The region is known for its deep focus on the very best of everything. It lacks the brash overt gauche feel of places like Dubai while promoting itself as the most expensive place on the planet; a balance it strikes with contemporary culture and classic taste. Singapore welcomes you; it invites you to see its beauty no matter who you are – but if you have money, it ups the warmth of the embracing hug.
In the depths of 2021, with the pandemic still restricting travel across the globe, Singapore’s Gross Gaming Yield (GGY) showed an interesting shift. While only 300,000 people entered Singapore in the entirety of 2021 – a figure that gains perspective when comparing it to the 19.1 million that visited in 2019 – the Singapore gambling market took in SPD$2.012bn. A marked rise from 2020’s SPD$1.8bn – when 2.7 million people visited the country.
So, while significantly fewer people visited the island nation in 2021, the money spent per person represented a massive increase for the duopoly. This, of course, means the VIP market drove Singapore through the doldrums of the pandemic; and now continues to be the engine of Singapore’s gambling market post-pandemic.The 8% pick up in revenue during 2021, compared with the 88% drop in visitation, is not drastic by any means. Though it obviously didn’t mark a recovery, it showed the quick shift in where VIP consumers wanted to be outside of Macau.
Until 2030, the same two operators will be sitting on the island without further competition. That agreement is fixed until then. But what happens when 2028 arrives and some of the other global brands get ideas about the expiring licences? The likes of MGM Resorts International, Wynn Resorts and Caesars won’t ignore the country forever – and, as the rest of Asia begins to open to the idea of casinos, Singapore will have to adapt to keep its newly found place in the market. The ramifications of allowing other Asian hubs to take parts of the VIP market away in the future could affect other parts of international travel into Singapore, which would have disastrous effects on a market it now counts on for investment in other parts of the nation.
For the moment, the upturn in the VIP consumer base using casinos in Singapore, and the effort by the current two casinos to expand operations, will be more than enough for bettors currently flocking to the nation. However, both Sands and Resorts World will be wary of the competition encircling them in the region.
THREAT FROM THE PHILIPPINES
It would be foolish to ignore the wider Asian markets and focus on the troubles of Macau; the rise of Manila can’t be ignored as the Philippine market begins to pull in the masses bereft of a place to gamble.
For a start, the Philippines has a broad domestic base over three times larger than Singapore, Malaysia and Macau combined. It also has 51 casino resorts operating currently, with 13 of those privately owned by the likes of Bloomberry and Resorts World. It’s a point that Jason Ader, CEO of 26 Capital Acquisition Corp, made in a recent exclusive chat with Gambling Insider: “Singapore is constrained by the duopoly structure that it has. I think Singapore will remain very healthy, but its growth is limited.” So, while Singapore may be keeping up with the bigger players in the market right now, it probably won’t be there very long.
But Ader also noted the strong VIP market, saying: “I think Singapore is doing the best right now with its VIP market. The Philippines I’d say is second best. And then, of course, Macau third.” It is that market that Singapore is banking on; Resorts World and Sands know competing with the likes of the Philippines is a fool’s errand in terms of mass. However, Singapore knows neither Manila nor Macau is the international destination that Singapore is.
The Philippines might have the space and the variety of choices that will suit any kind of mass gambling audience – but Singapore has the prestige and, when targeting a VIP audience, this is more than enough to pull in the right clientele.