More than 100k Singaporeans banned from entering casinos

Regulatory constraints dominate over the upcoming renewal of the two casino gaming licenses in 1H 2013.

According to Nomura, the outlook for 2H 2012 could be constrained by slower growth prospects from both the VIP and the mass market segments. With a relatively small domestic market size, contribution from overseas’ VIP players is becoming an important driver. Unfortunately, the growth potential in the VIP business in Singapore is capped by the near non-existence of junket operators who have been instrumental in driving gaming revenue growth in Macau by providing credit to VIP players.

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Catalyst: Regulatory issues to dominate
We expect regulatory pressure to gain momentum ahead of the upcoming renewal of the two casino gaming licenses in 1H 2013. In an on-going effort to control problem gambling, the government announced on 7 June that it would ban more gamblers from entering the casinos. The other potential regulatory risk is the removal of the heavily subsidised entry pass of SGD2,000 per annum.

Another 15,000 to be barred from entering the casinos. On June 7, the government announced that it was putting 15,000 more financially vulnerable Singapore citizens and permanent residents (PRs) from entering the casinos, bringing the total to around 108,029 persons by August 2012. This is a significant number given Singapore’s relatively smaller population base.

Implications. The latest move by the government reiterates our view that unlike in Macau, the Singapore government has no plans to make Singapore a gambling hub. Therefore, one of the remaining key concerns has been regulatory, involving raising the entry levy for locals. We believe the latest move is part of the government’s preparations ahead of the renewal of the casino licenses.