The long wait is over for the two Singapore casino operators. Ever since it was announced that gaming would come to the island nation more than five years ago, there has been speculation what role the VIP market would play. Since Singapore is within an easy flight of mainland China, whose VIP market fuels gaming in Macau, it was suggested that these players would be a main target for Singapore as well.
But as regulations were written for Singapore, it became clear that the Casino Regulatory Authority of Singapore would take a more rigid licensing stance over VIP operators than the Macau government does. And since Macau gaming has long been connected to the criminal Triads, it is unlikely that many VIP operators could pass a regulatory muster.
When the regulations were finally issued last month, it became clear that the Singapore government has included rigid regulatory oversight of the VIP market. Just some of the provisions are:
- Full licensing for junket operators and their representatives. Requirements for licensing include the revelation of details of their financial history, among other things.
- Junket operators must provide the authorities with documentation and any information in their background on demand.
- A list of licensed representatives employed by junket operators must be submitted to the authorities yearly and their departure noted within seven days.
Casinos must also comply with strict rules:
- Casinos must endorse a junket operator’s license application by signing an agreement, which spells out the commission to be paid as well as other details of the agreement. Junket operators need this agreement to apply for a license.
- Casinos must issue identification cards for junket operators and representatives, who will need to wear them at all times while in the casino.
Penalties for non-compliance include a $400,000 fine, with an additional $10,000 for each violation. Both the casino and the operator could also be subject to a loss of license for a serious violation.
One regulation the CRA did not impose was a cap on the commission structure or suggest how it should be paid. In Macau, the commission to the VIP operators is paid on the buy-in of the entire junket, removing any risk for the junket operator. In other countries and in Las Vegas, the junket operator gets a fee, sometimes supplemented by a percentage of the money lost by the junket players.
Melvyn Boey, an analyst with Bank of America Merrill Lynch, says he was not surprised by the announcement.
“I am not inclined to change my revenue projections,” he said. Boey expects total gross gaming revenue from the casinos at Marina Bay Sands and Resorts World at Sentosa to hit S$4 billion in 2011, the first full year of gaming operations there.