Singapore casino revenue expected to decline in 2016

Gross gaming revenue fell more than 10% to S$6.7bn (USD 4.8b ) in 2015 and analysts expect this downward trend to continue into 2016.

Revenue generated at the two integrated resorts, Marina Bay Sands and Resorts World Sentosa, together make Singapore the third largest gambling destination in terms of revenue, behind Macau and Las Vegas. But two properties can only sustain market growth for so long as original attractions start to become dated.

Las Vegas Sands and Genting Singapore were issued casino licenses in 2007 and their exclusivity period runs out in 2017, however, the government has indicated that it is “unlikely” to grant new licenses following this period, according to an outlook report on Singapore and Malaysia casino markets from Fitch Ratings.

Fitch analysts said the “duopolistic market” looks set to continue for some time, due to government concerns that new casinos may have a negative effect on Singaporeans, increasing the risks of problem gambling. Fitch added the “highly regulated” industry framework continues to create difficult operating conditions.

Morgan Stanley analysts noted in a recent report that sustained appreciation of the Singaporean dollar against other Southeast Asian currencies is impacting the spending power of tourists, many of which frequent the casinos. They estimate the local currency will be 5pc higher year-on-year by the third quarter of 2016.

“We believe deteriorating fundamentals in Singapore represent an underappreciated risk. We have cut our Singapore estimates to reflect a weaker economy and the meaningful Singapore dollar strengthening affecting foreign demand,” said Thomas Allen and Mark Savino, Morgan Stanley & Co, and Praveen Choudhary, Morgan Stanley Asia.