Mar 09, 2011
by Richard Hartung
In 2009, before the casinos opened, the Government Budget forecast betting revenues of S$1.86 billion. That amount was about 5.5 per cent of operating revenue of S$33.43 billion, a nice contribution from the gaming industry in a difficult economic environment.
Since then, the integrated resorts (IRs) have opened with a roar and the results have exceeded expectations. In the fourth quarter of last year, Marina Bay Sands earned S$391 million on S$717 million of revenue and Resorts World Sentosa earned S$389 million on S$775 million of revenue.
Simply extrapolate that for a full year - not even counting the ongoing expansion of the IRs or the potential for VIP junkets - and revenue would reach nearly S$6 billion while profits would be over S$3 billion per year. Brokerage firm CLSA told Today that it forecasts revenue at S$8.1 billion next year.
With revenue growing so fast, one might expect the gaming industry to contribute a lot more to the Budget now. Even with the casinos going almost full bore, however, the Government expects betting revenue to contribute just S$2.41 billion to operating revenue in FY2011. That amount is just barely up from S$2.29 billion in FY2010, and it is an increase of only about S$550 million from the 2009 budget.
Not all of that S$550 million increase in betting revenue comes from the IRs, either. With more gamblers making Toto or 4D bets in an improved economy and newer games like Scratchit! offering instant wins, taxes from traditional gambling will most likely move higher in FY2011 too.
That increase in the Budget comes even as the IRs are doing better than expected. Before the IRs opened, forecast revenue was reportedly S$10 million to S$15 million per day. Revenue of just S$6 billion would mean over S$16 million per day in revenue. And the daily take per table is reportedly double or triple almost anywhere else.
Singaporeans are visiting the casinos more than expected, too. In discussions on the IRs in Parliament in 2005, Prime Minister Lee Hsien Loong said "our estimate is that with two IRs, gambling by Singaporeans in the IRs is unlikely to exceed S$1 billion a year". Inveterate Singapore gamblers may already have broken that barrier, though, since Dow Jones reported early on that over one third of the visitors at Marina Bay Sands' casino were from Singapore. While Singaporeans may not be the highest rollers, revenue from them could exceed S$1 billion already even if they only gamble about half as much as the tourists.
Admittedly, S$550 million more in the Budget is a lot of money. The surprise is that the increase is not higher and the question is what to do. The Government cannot raise the tax rate. In proposing the Casino Control Bill in 2006, then-Minister for Home Affairs Wong Kan Seng said that "casino tax rates will remain unchanged for 15 years". The Government cannot go back on its word and suddenly raise tax rates even if the situation has changed dramatically.
It is also true that the IRs are a business, not a charity. While the Tote Board mission is to "donate funds for activities that will make for a stronger nation and a better people", the IRs are private companies. It may be time, though, for the IRs themselves to look at whether they should do more in light of the changed circumstances.
Marina Bay Sands does say that it has "sponsored a wide range of charitable causes focused on youth and education". Resorts World Sentosa says it believes in "improving the lives of children".
In other countries, corporate social responsibility in the industry is gaining traction, going beyond social responsibility towards problem gamblers, to making the community a better place. Casinos and industry forums are discussing corporate social responsibility more. As macaubusiness.com said: "CSR can be a way to achieve a sustainable competitive advantage for Macau's six casino operators".
At a time when inflation is rising and families are trying to make ends meet, Budget initiatives to help are being discussed. Even if tax revenues from betting do not increase significantly, there could still be an opportunity for the IRs to take the lead in CSR and consider showing even more how they truly care about children, education and more here in Singapore.
Richard Hartung is a consultant who has lived in Singapore since 1992.
by Richard Hartung
In 2009, before the casinos opened, the Government Budget forecast betting revenues of S$1.86 billion. That amount was about 5.5 per cent of operating revenue of S$33.43 billion, a nice contribution from the gaming industry in a difficult economic environment.
Since then, the integrated resorts (IRs) have opened with a roar and the results have exceeded expectations. In the fourth quarter of last year, Marina Bay Sands earned S$391 million on S$717 million of revenue and Resorts World Sentosa earned S$389 million on S$775 million of revenue.
Simply extrapolate that for a full year - not even counting the ongoing expansion of the IRs or the potential for VIP junkets - and revenue would reach nearly S$6 billion while profits would be over S$3 billion per year. Brokerage firm CLSA told Today that it forecasts revenue at S$8.1 billion next year.
With revenue growing so fast, one might expect the gaming industry to contribute a lot more to the Budget now. Even with the casinos going almost full bore, however, the Government expects betting revenue to contribute just S$2.41 billion to operating revenue in FY2011. That amount is just barely up from S$2.29 billion in FY2010, and it is an increase of only about S$550 million from the 2009 budget.
Not all of that S$550 million increase in betting revenue comes from the IRs, either. With more gamblers making Toto or 4D bets in an improved economy and newer games like Scratchit! offering instant wins, taxes from traditional gambling will most likely move higher in FY2011 too.
That increase in the Budget comes even as the IRs are doing better than expected. Before the IRs opened, forecast revenue was reportedly S$10 million to S$15 million per day. Revenue of just S$6 billion would mean over S$16 million per day in revenue. And the daily take per table is reportedly double or triple almost anywhere else.
Singaporeans are visiting the casinos more than expected, too. In discussions on the IRs in Parliament in 2005, Prime Minister Lee Hsien Loong said "our estimate is that with two IRs, gambling by Singaporeans in the IRs is unlikely to exceed S$1 billion a year". Inveterate Singapore gamblers may already have broken that barrier, though, since Dow Jones reported early on that over one third of the visitors at Marina Bay Sands' casino were from Singapore. While Singaporeans may not be the highest rollers, revenue from them could exceed S$1 billion already even if they only gamble about half as much as the tourists.
Admittedly, S$550 million more in the Budget is a lot of money. The surprise is that the increase is not higher and the question is what to do. The Government cannot raise the tax rate. In proposing the Casino Control Bill in 2006, then-Minister for Home Affairs Wong Kan Seng said that "casino tax rates will remain unchanged for 15 years". The Government cannot go back on its word and suddenly raise tax rates even if the situation has changed dramatically.
It is also true that the IRs are a business, not a charity. While the Tote Board mission is to "donate funds for activities that will make for a stronger nation and a better people", the IRs are private companies. It may be time, though, for the IRs themselves to look at whether they should do more in light of the changed circumstances.
Marina Bay Sands does say that it has "sponsored a wide range of charitable causes focused on youth and education". Resorts World Sentosa says it believes in "improving the lives of children".
In other countries, corporate social responsibility in the industry is gaining traction, going beyond social responsibility towards problem gamblers, to making the community a better place. Casinos and industry forums are discussing corporate social responsibility more. As macaubusiness.com said: "CSR can be a way to achieve a sustainable competitive advantage for Macau's six casino operators".
At a time when inflation is rising and families are trying to make ends meet, Budget initiatives to help are being discussed. Even if tax revenues from betting do not increase significantly, there could still be an opportunity for the IRs to take the lead in CSR and consider showing even more how they truly care about children, education and more here in Singapore.
Richard Hartung is a consultant who has lived in Singapore since 1992.
No comments:
Post a Comment