Three years before their 10-year duopoly is due to expire, Marina Bay Sands (MBS) and Resorts World Sentosa (RWS) seem to be running into headwinds.
The two casinos were granted exclusive rights in Singapore from 2007 to 2017, partly so that their operators - Las Vegas Sands and Genting Singapore - could get a head start in recouping their large investments.
These rights allowed the integrated resorts (IRs) to rev up from zero to more than US$1.2 billion (S$1.5 billion) in combined quarterly revenues in the space of a few months, and soon made the casinos the world's most profitable, with margins of about 40 per cent.
But takings have plateaued lately. Last year, the IRs' combined revenue was about $7.4 billion - a rise of just 3 per cent from that in 2012, according to estimates from UOB Kay Hian.
Macroeconomic factors partly explain the dip.
The strong Singapore dollar has kept some mass- gaming tourists away, while China's slowing economy is dampening arrivals of VIP high rollers.
However, analysts also cite fundamental issues unique to Singapore's casino market, such as the unusually rigid restrictions on local play here.
Casino demand here is not expected to show significant new growth, unless there is a steep pickup in China's economy - and hence, in inbound rich Chinese players - or unless Singapore eases gaming rules, which is unlikely.
As a result, some analysts are trimming their expectations for gross gaming revenues for the full year.
Citi Research cut its forecast for the IRs' combined revenue this year to US$6.5 billion from US$6.6 billion, mainly due to weak VIP volumes at MBS.
Although both casinos are generating significant cash flow, their own operators as well as investors no longer see Singapore as a market with good growth potential. A UOB Kay Hian analyst described it as "uninspiring".
Given the regulators' clampdown on problem gambling and strict gaming rules since 2012, a third casino also looks unlikely to brighten up the domestic scene.
Singapore's casino market reached saturation as early as 2012, UOB Kay Hian analysts say.
Total gaming revenues here hit a record of $7.92 billion in 2011. Then, it dipped 8.3 per cent to $7.26 billion in 2012 before rebounding about 3 per cent last year.
Their core earnings are also stagnating. MBS' EBITDA - earnings before interest, taxes, depreciation and amortisation - stayed largely flat at US$1.5 billion last year, from US$1.4 billion in 2012.
The IR posted a higher net profit for the second quarter this year, but its VIP gaming volumes and mass-market revenues have been dropping.
Genting Singapore's EBITDA slid from $1.35 billion in 2012 to $1.15 billion last year, prompting some analysts to conclude that the company's growth potential here has hit a ceiling.
This is not least because the Government's heavy regulation of the industry has stacked the cards against casinos. The $100 casino entry levy on locals and penalties against marketing to them have crimped demand, especially from the mass-gaming market.
Limited hotel room supply at the two IRs hasn't helped, either. Typically, the more hotel rooms a casino has, the more it can attract premium mass customers by offering them free hotel rooms.
Strict rules on junket operators have also curbed the casinos' ability to profit from high rollers.
In gambling havens like Macau, junket operators bring in high rollers and extend credit to them to play. But the Government has opted to keep Macau-style junket operators out of Singapore, and rightly so, given their reputed links to Chinese organised crime groups, among other things.
This means, however, that the IRs here have to extend credit themselves to attract VIP players like those from China, the world's richest repository of high rollers.
A challenging economic outlook and the strong Singdollar have led to such VIP visitors asking the house for better exchange rates when they repay gambling loans. And since Chinese players account for up to half of VIP business at both MBS and RWS, the IRs' credit policy has led to relatively high provisions for bad debts.
Macquarie Research has estimated that Genting's extension of credit to VIP players has shaved off 7 to 8 percentage points of its EBITDA margins. In its latest results, Genting's net profit slumped 27 per cent from a year ago to $102.3 million for the three months to June 30, due to a whopping $81.5 million in bad debt provisions. The firm said the provisions are "one-off" and in response to the softer macro environment.
But analysts at CIMB Research say giving more credit will remain a key issue in the absence of traditional junket activity in Singapore.
The Government is unlikely to loosen curbs on junket operators, and has, instead, imposed stricter rules for VIP gaming. These include making players draw down their entire $100,000 deposit before they can get credit - which may also deter such gamers.
But most analysts are not too concerned about the bad debt issue. Both IRs are close to recovering their entire development costs - $7 billion for RWS and $8 billion for MBS - and have been careful in managing their finances.
Thus, Singapore has been a great investment for Las Vegas Sands and Genting Singapore. It is seen as "an annuity" that will consistently generate US$6 billion or so in gaming revenue annually, said analyst Grant Govertsen of Union Gaming Research Macau.
Some recent developments have also been encouraging.
A Bill tabled in Parliament on Sept 8 would block access to unauthorised online gambling websites and money transfers to and from these sites, indirectly helping the two IRs as online gambling would cannibalise their business.
The ongoing anti-corruption drive in China and transit visa restrictions for Chinese gamblers have also hurt the VIP business of Macau casinos and may send thwarted gamblers to Singapore's baccarat and roulette tables.
Mr Govertsen believes MBS is likely to see a pickup in Chinese VIP players and expects this to continue to the end of this year and into 2015.
On the other hand, more competition may be on the cards from South Korea and Japan, which are considering legalising casino gambling. But most analysts say this will lead to a larger overall gaming market, presenting new opportunities rather than eating into existing players' market shares. "Any new casinos in places like Japan or Korea are likely to attract northern Chinese, who are generally not visiting Singapore today," Mr Govertsen said.
But he added that if some of Singapore's closer neighbours, such as Vietnam, start to allow casinos, that could cause the Republic to lose some market share.
Still, the Government's strict regulatory regime on casinos remains, perhaps, the biggest impediment to the sector's growth, and has stifled any talk of a third IR.
The two existing IRs have boosted the flagging domestic tourism industry, which has seen visitor arrivals grow from 11.6 million in 2010 to 15.5 million last year. They also directly employ over 22,000 staff, of whom about 70 per cent are locals, according to the latest data from 2012.
But despite the economic benefits, many observers doubt that there is any appetite for a third IR, come 2017. Already, they say, existing operators are unlikely to be allowed to significantly expand their casinos in the near future.
One Macau-based analyst noted: "Based on how we've seen the Government operate since 2010 - namely, by making things more difficult for existing operators - it's hard to believe it would want to see even more casinos."
Prospects look even more untenable in the light of current tight foreign labour policies here, CIMB economist Song Seng Wun said. "IRs are extremely labour-intensive projects. Given the current constraints on labour, how are you going to find the workers to build it, and then staff it? As it is, businesses here are already grappling with manpower shortages," he said.
For now, mindful of the social impact, the Government seems reluctant to make it easy for the IRs to rack up the type of growth possible in a casino-centric market like Macau. Nor do observers expect any new gaming licences to be introduced.
If Singapore is reluctant to embrace new casinos, many other Asian cities are keen to do so, possibly at the expense of the IRs here. That's something to bear in mind. It's not an easy call but, for now, it seems the Government is inclined towards "Two is Enough".
This article was first published on Setpember 24, 2014.
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