Urbis Think Tank
Huge growth at Singapore casinos impacts on Australian properties
Last week, the president of the American Gaming Association, Frank Fahrenkopf presented at the Global Gaming Expo Asia in Macau, and commented at a news conference:
“Now more than a year old, the two integrated resorts in Singapore have exceeded all expectations and turned the nation into Asia’s second global gaming superpower. The country’s gaming market will likely overtake Las Vegas as the world’s second-largest gaming centre as early as this year.”
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Other Asian markets growing quickly
He then went on to say that the growth in other Asian countries such as Cambodia and Laos are expanding at record levels, and that Sri Lanka will also legalise gambling in 2012.
Impacting on Australian properties
The impact of the two integrated resorts in Singapore on local properties was flagged by Crown in its February 2011 investor presentation. It reported that VIP play was down 5.5% at Crown and 14.3% at Burswood, due to the opening of the Singapore resorts. While Crown’s share in the Macau story through its stake in Melco is growing revenues, it still suffered a normalised loss from Melco of $6.6m for 1H2011. Crown is now relying more on local gamblers for increased revenues.
Although Tabcorp reported an increased revenue of 5.4% at Star City, this was due to an expansion of its product offering. Given the impact on Crown’s VIP program, and the continued expansion of gaming in Asia, it is very likely that Tabcorp’s casino results will also suffer in the same way as Crown. Again, Tabcorp will rely on local Sydney gamblers as the competition from Asian casinos hits its high roller program.