Singapore casinos showing signs of maturity

"There is a lot of pundits that have the view that the Singapore market is becoming mature, if one can call it that, as it relates to a limited growth to the upside because there is a finite capacity," said Jonathan Galaviz, chief economist at Galaviz & Company. "There is only so much casino gaming space in the integrated resorts where you can have only a limited increase in gaming revenue."

Genting Singapore posted a 17 % slide in second quarter revenue to us$ 600 million, from us$ 721.1 million a year earlier. The company noted a lower take from big spending, premium players.

"Win percentage in the premium player market segment for second quarter of 2011 was significantly lower than the theoretical win and that of first quarter of 2011, pulling down both revenue and EBITDA numbers of the Singapore IR," Resorts World integrated resort (IR) said in a statement accompanying its results on Friday.

Analysts say Singapore may be losing out to Macau, the Chinese territory which is now the world's largest gambling centre, in attracting premium gamblers because of restrictions on junket operators who have yet to be licensed.

Junket operators bring in high-rollers at a commission to the casinos. Macau registered 12 % growth in revenues last quarter. Genting Singapore's second quarter net profit dropped 39 per cent from the same period last year to us$ 200.3 million.

SIAS research investment analyst Liu Jinshu said the days of sky-high earnings growth from casinos in Singapore are over. "When the integrated resorts first came out, we had high expectations," he told MediaCorp in an interview. "One year down the road, I would say we can no longer expect things like 50 %, 100 % growth rates."

With little room for expansion of gaming activities, either physically or within the bounds of legislation, Singapore's casino resorts are expected to increase reliance on non-gaming attractions.

"The strategies of the senior management team focusing on the non-gaming pieces are really going to be, I think, where a lot of the positive, upward performance potential remains," said Galaviz, who produced a public policy white paper outlining the tourism benefits of casino gaming legalisation in Singapore.

Analysts at Citibank expect RWS, which has about 60 % of the Singapore gaming market, to give up some ground to rival, Marina Bay Sands, in coming quarters. Citibank says market share between the two IRs should equalise next year.